A Clear Approach to Fixed Income Amidst a Disorienting Environment
Today’s array of fixed income solutions may feel overwhelming. The Portfolio Construction Services team breaks them down into three distinct goals-based objectives.
Since the Global Financial Crisis, fixed income has turned from what has traditionally been a fairly straightforward asset class into one that investors may find disorienting. In our previous blog post, we introduced a goals-based approach to fixed income that reduces this complex universe of fixed income managers into three distinct objectives: Defend with Core, Diversify with Unconstrained and Increase Income with Dynamic Credit. We use a proprietary, forward-looking approach to help advisors allocate across these three objectives according to one’s goals:
Consolidating the breadth of fixed income instruments into three objectives can be confounding. Below, we outline how Core, Unconstrained and Dynamic Credit can be defined by their respective goals, personalities and criteria:
While there’s no single strategy to meet every client’s needs, we believe clients are much better served with a goals-based approach. We advocate considering allocations to all three of the discussed fixed income categories; each has its own benefits, and an exposure to each ought to be based on a client’s goals and a strict definition of the managers deployed for each objective.
The Janus Henderson Portfolio Construction Services team offers a powerful framework to help convey a clear, forward-looking approach to fixed income for clients. You can read more about our approach to goals-based fixed income portfolio design.
*Equity-like fixed income vehicles are investments that may be less susceptible to changes in interest rates or other factors than traditional fixed income. They are higher risk than traditional fixed income, without necessarily the same returns as a true equity investment.
No investment strategy can ensure a profit or eliminate the risk of loss.
Fixed income securities are subject to interest rate, inflation, credit and default risk. The bond market is volatile. As interest rates rise, bond prices usually fall, and vice versa. The return of principal is not guaranteed, and prices may decline if an issuer fails to make timely payments or its credit strength weakens.