Could Multi Sector Fixed Income strategies offer investors positive returns during volatile market conditions?

2022 has so far proven torrid for credit investors, with few strategies looking good on an absolute-return basis. CAMRADATA’s latest whitepaper on Multi Sector Fixed Income (MSFI) examines how this strategy has fared during the recent turbulent times and how it could serve investors moving forward.

The whitepaper includes insights from firms such as, Janus Henderson Investors, Royal London Asset Management, Sanlam Investments, Aon, bfinance, LCP, Spence and XPS Investment who all attended a roundtable hosted by CAMRADATA in London in June.

Markets suffered badly in the first half of 2022, with very few bond indices in positive territory and several exhibiting double-digit losses. Inflation, exacerbated by the Russian invasion of Ukraine and Covid-related supply chain blockages forced policymakers into action.

The report begins by reviewing the impact on bond markets and whether there had been any refuges for go-anywhere, long-only strategies.

It goes on to consider what shocks may lay ahead, such as Russia turning off the gas flowing into Germany which would be the catalyst to tip Europe into recession, and how investors can plan for a deep recession.

It concludes with a degree of optimism that now could still prove to be a good time to invest in multi-sector fixed income strategies, especially if stock picking remains strong and investors use asset allocation optionality within the strategy well.

Natasha Silva, Managing Director, Client Relations, CAMRADATA said, “The conditions which have brought us here are so extraordinary that clarity, if not optimism, is in short supply. Parts of the economy are still suffering from lockdown damage; others are reviving strongly.

“Higher prices are hurting consumers and yet many are richer than they have ever been thanks to furlough and enforced thriftiness over the past two years. War has stoked commodity prices at a time when the global economy is taking tentative steps to alter its energy mix. These complications affect the bond markets, where lower rated credit hides some zombies that have hitherto survived.

“Our latest whitepaper looks at Multi Sector Fixed Income strategies, which have relative freedom to invest across fixed income markets, and offers valuable insight for investors employing this strategy.”

The whitepaper also includes three opinion articles from the sponsors:

  • Janus Henderson Investors – ‘A bird in the hand: are yield returns king again?’
  • Royal London Asset Management – ‘Multi-asset credit: ideal for times like these’
  • Sanlam Investments – Outlook for the credit markets’

To read the Multi Sector Fixed Income whitepaper, please click here.

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