A New Paradigm In Fixed Income

For more than three decades, fixed income has delivered yield, portfolio diversification and liquidity. Today, however, weak global growth and inflation has left us with low yields, higher market risk and weak diversification against growth assets. At the same time, central-bank and regulatory interventions have fractured fixed-income market liquidity.

Investors need a new portfolio paradigm: replacing traditional fixed income with three objectives-oriented asset buckets; and abandoning market capitalisation-weighted benchmarks that reward leverage in favour of low-turnover strategies anchored in fundamental issuer quality.