- On U.S. Fixed Income
- Rethinking Fixed Income Allocations
- Sourcing strategies with varying risk and return drivers is key.
- 2022-02-03 04:43
- Key Insights
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- The evolution of fixed income markets and increasingly diverse strategies dictate the need to evaluate strategies along a flexibility and liquidity continuum.
- Asset allocators should consider a risk‑budgeting approach to allocate across the fixed income continuum based on their policies and guidelines.
- We believe that core bonds still have an important role to add diversification and liquidity to a portfolio, but this role is now smaller and less impactful.
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1 Credit spreads measure the additional yield that investors demand for holding a bond with credit risk over a similar‑maturity, high‑quality government security.
2 Alpha is the risk‑adjusted excess return of an investment relative to its benchmark.
3 Beta measures the relative volatility, or risk, of a security or group of securities relative to the risk of the broad market or a specific factor.
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