In our latest Topics of Interest paper, we reaffirm that a global approach to investing in bonds has a place in diversified portfolios. We explore the evolution and trends of the asset class and provide our views on hedged versus unhedged strategies.
- We believe that investment managers that build portfolios from a truly global opportunity set can introduce exposures to non‐US credit, access to emerging markets debt and oftentimes FX exposures if deemed attractive.
- We acknowledge that one of the major risks in global fixed income is unhedged foreign currency exposure.
- We believe that broadly, hedged global bond managers can provide more consistent risk‐adjusted returns than unhedged global bond managers. We do identify a caveat that there are some unhedged global bond managers that have exhibited consistent currency management skill in addition to managing bonds.