Fixed Income June 2017 

How to build a robust yield into a portfolio

  • To understand where yield can be found in 2017.
  • To assess the risks involved with finding yield.
  • How to use inflation-busting strategies in client portfolios.
CPD
60min
How to build a robust yield into a portfolio

Introduction

There are two things investors need to beware when looking for yield: a crowded market and volatility. 

This is the warning from Nicholas Wall, manager of the Old Mutual Global Strategic Bond Fund, who comments: “Many hunt-for-yield trades are overcrowded and mature. 

“Investors should make sure they can tolerate liquidation periods, and that they do not find themselves in a position where they are forced sellers.”

Yet despite this prognosis, many investors are looking for yield in the fixed income markets, and the fact the market is more than US$100trn in size means there are many opportunities out there to create stable, diversified fixed income portfolios that can outstrip inflation.

This special report will discuss where people are finding yield in the fixed income markets, what sort of tailwinds or headwinds are affecting bond performance in the near-term, how to use different strategies such as short-duration in a portfolio, and ways to mitigate inflation’s ravaging effect on a portfolio.

Contributors to this report: Nicholas Wall, manager of the Old Mutual Global Strategic Bond Fund; Patrick Connolly, head of communications for Chase de Vere; Darius McDermott, managing director of Chelsea Financial Services; Jonathan Baltora, portfolio manager for AXA Investment Managers, and Chris Iggo, chief investment officer for AXA Investment Managers; Dan Ivascyn and Alfred Murata, managers of the Pimco Income Fund; Chris Leyland, deputy chief investment officer for True Potential; Eugene Philalithis, portfolio manager of the Fidelity Multi-Asset Income Fund; Stephen Crewe, director of Fulcrum Asset Management; Bernard Delbecque, senior director for economics and research at EFAMA; Morningstar; Standard & Poor’s; Moody’s; The Investment Association.

simoney.kyriakou@ft.com

In this special report

    CPD
    60min
    1. According to Mr Iggo, what is a challenge for investors at the moment?

    2. What, according to Mr Leyland, is a sweet spot for inflation?

    3. Mr Wall believes we are in an environment where private sector investors will demand a higher real yield to fund government deficits. True or false?

    4. According to Mr Baltora, what would most likely happen if real GDP growth accelerates?

    5. What does Mr Iggo say it is just as important to focus on, not just on making a high return?

    6. Mr Iggo says some strategies try to boost the income they deliver to investors by doing what?

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