Absolute Return Fixed Income

Taking on the absolute challenge

Why absolute return?

Aims for positive returns

We aim to achieve a positive capital return in all market conditions over rolling 12-month periods.

There is no guarantee that a positive return will be achieved over this or any time period and capital is at risk.

The flexibility to invest in derivatives enables our manager to express both positive and negative views on the market – and potentially benefit from falling as well as rising markets.

May appeal to cautious investors.

A key objective is to preserve investors’ capital.

We invest in a ‘core’ portfolio of short-dated fixed-income instruments to help dampen market volatility.

We employ diversification to create a strategic mix of assets, aiming to deliver a positive return with low volatility.

We aim for a low correlation with index-benchmarked funds, and this can help reduce overall risk when held within a broadly-diversified portfolio.

Our approach

  • Low volatility: our absolute return bond strategy exhibits lower volatility than many diversified growth strategies.
  • Stable, risk-adjusted returns: the freedom to express views and profit both from rises and falls in the market can offer the potential for better returns relative to a benchmark-constrained portfolio.
  • Focus on capital preservation: the core portfolio aims to generate cash-like returns. High-quality short-dated fixed income instruments, typically with a duration of less than two years, are usually held to maturity. This acts to help dampen volatility, allowing greater scope to seek excess return elsewhere.
  • All market conditions: We apply manager skill in three areas of the market: corporate bonds, government bonds and foreign exchange. We can adopt long and short positions, using derivatives to implement views on interest rates, credit spreads and exchange rates. This means we can seek value in all market conditions. Relative value trades allow us to take a view on one country, market, sector, bond or currency relative to another.