In The Return of Absolute Return Fixed Income, PGIM Fixed Income Senior Investment Officer Michael Collins discusses different types of absolute return fixed income portfolios and how a well-diversified, duration-constrained portfolio can take advantage of alpha-generating opportunities while avoiding systematic exposure to rising interest rates.
Absolute return fixed income strategies go by a number of different names: absolute return, unconstrained, real return, strategic alpha, opportunistic, strategic income, non-traditional, and even ‘go-anywhere’ or ‘GA’ fixed income. Regardless of the name, these strategies generally share two common traits:
- They strive to deliver positive absolute returns over a specified period regardless of the direction of interest rates.
- Unlike traditional fixed income strategies, they are not typically managed against a market-capitalization weighted bond index. Rather, they are often managed against a cash-based benchmark such as 3-month LIBOR, 3-month Treasury bill, or any country’s money market (‘risk-free’) rate.
Read The Return of Absolute Return Fixed Income. Want to talk to Mike Collins? Contact Claire Currie.