Invest in Credit
Where opportunity meets stabilityWhy invest in Credit?
With a stark repricing in credit, valuations are now highly compelling and present an attractive entry point for investors. Yields and spreads have risen significantly, allowing credit to offer meaningful income opportunities and the potential for capital gains should decline over time. For those concerned about rising interest rates and inflation, credit can provide a better cushion than some longer-duration asset classes like government bonds¹.
Diversification
Investing in credit offers a unique opportunity to diversify your investment portfolio beyond equities. traditional asset classes like stocks and bonds. Not only does credit investments encompass a wide range of assets, including corporate bonds, municipal bonds, loans, and other fixed-income securities, it also offers opportunities in varying geographies such as Global, US, Europe and Asia¹. By adding credit investments to your portfolio, you can potentially reduce overall risk and enhance returns by spreading your investment across different issuers and sectors.
Steady income generation
Credit investments are often favoured by income-oriented investors due to their ability to generate steady cash flows. When you invest in credit, you typically receive periodic interest payments from the issuer, providing a consistent income stream. This can be particularly attractive for investors seeking regular income to fund their retirement, cover living expenses, or meet other financial goals.
Capital preservation
Credit investments, particularly those with higher credit ratings, may can offer stronger a level of capital preservation compared to riskier assets. While no investment is entirely risk-free, credit investments backed by reliable issuers and supported by rigorous credit analysis can provide a measure of stability and help protect your investment principal. This can be especially beneficial during times of market volatility or economic uncertainty.
Potential for yield enhancement
Within the credit space, there are opportunities to seek higher yields by investing in riskier credit instruments, such as high-yield bonds or emerging market debt¹. These investments can potentially offer higher income generation, although they come with increased risk. Careful selection and analysis are crucial to balance risk and reward effectively.
Explore our related Credit funds
Schroder ISF Global Credit Income (A Distribution USD MF)
Schroder Asian Investment Grade Credit (SGD A Distribution)
Why Schroders?
In an environment of high market volatility, managing risk is crucial. This means managers need to focus as closely on managing downside risk as they do on credit selection. At Schroders, we use an innovative forward-looking, themes-based credit selection process to guide in-depth proprietary credit research and differentiate between credit issuers globally. We also use proprietary quantitative tools to integrate risk management through every step of the investment process, with the aim of capturing healthy yields while mitigating downside risk
Expertise and track record
When you choose to invest with Schroders, you gain access to our team of experienced investment professionals who have a proven track record in managing credit portfolios. With a global platform of 40+ credit analysts and more than 50 years of experience running fixed income, Schroders has a strong track record of making its clients’ money work harder across all phases of the market cycle.
Rigorous research and risk management
Schroders’ investment process revolves around rigorous forward-looking research, fundamental analysis, and disciplined risk management practices. We conduct in-depth analysis of issuers, assess their credit quality, evaluate the sustainability of cash flows and interest payments, and consider macroeconomic factors to make informed investment decisions. Our proactive risk management approach aims to protect your capital while maximizing income potential.
Comprehensive range of credit solutions
At Schroders, we offer a comprehensive range of credit investment solutions tailored to meet the diverse needs of investors. Whether you prioritise income generation, capital preservation, or a balance of both, we provide a wide array of options designed to suit different risk appetites, investment goals, regional preferences, and time horizons.
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Disclaimers
¹Any reference to sectors/countries/stocks/securities are for illustrative purposes only and not a recommendation to buy or sell any financial instrument/securities or adopt any investment strategy.
²The fund has environmental and/or social characteristics within the meaning of Article 8 Regulation (EU) 2019/2088 on Sustainability related Disclosure in the Financial Services Sector (the SFDR). For information on sustainability-related aspects of this fund please go to www.schroders.com.
Past performance is not a guide to future performance and may not be repeated.
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