Fixed income funds: Spotlighting themes from the GFC
The fixed income asset class remains under close scrutiny. Consultants, researchers and clients continue to grapple with the question of how best to manage fixed income in the post-GFC environment. Two consistent themes are emerging: disaggregation and passive management.
Disaggregation is effectively the separation of the fixed income asset class into specialised buckets with the buckets managed by specialist managers. While this is not unusual in the context of the separation and specialisation of higher risk elements of the fixed income universe (for example EMD, high yield and hybrids), it has historically been less common in Australia at a core level. However, the debate is now focussed on the separation of sovereign and credit risk, with further granularity applied to duration, securitisation, geography and credit quality (to name but a few).
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