New Realities for Fixed Income

Rethinking Investment Objectives

The result of the global financial crisis is a new world marked by massive deleveraging, lower liquidity, and higher volatility – conditions that are likely to persist. It is a world in which traditional fixed income values, like consistent returns, have been joined by a new set of critical objectives:

Liquidity – Liquidity requirements must be directly addressed, and liquid portfolios must be truly liquid.

Diversification – Fixed income holdings must have low correlations to equities.

Return – There must be clear differentiation between alpha-seeking and beta-seeking approaches.

Investment solutions in today’s environment must address the fundamental shift in investor expectations – this translates into a shift in priorities and strategies.