Core Fixed Income

Decades of investing have taught us that investor perceptions, and security valuations, are more volatile than underlying fundamentals. Our investment horizon, which is longer than many managers, enables us to take advantage of inherent pricing inefficiencies in an effort to maximize portfolio returns. We use short-term periods of volatility or uncertainty to lean into opportunities if our analysis shows an investment to be fundamentally sound. 

Our Global Industry and Fixed Income analysts are the engine for idea generation and risk analysis. Our industry analysts cover the entire capital structure of companies globally, on behalf of both our credit and equity investments, building a depth of understanding crucial to developing a well-informed investment opinion. Our fixed income credit analysts partner closely with them, assessing liquidity profiles, funding profiles, access to capital, and downside scenarios. Our structured products team focuses on borrower, loan, and program characteristics, collaborating on factors affecting mortgage financing and other topics.

A strong price discipline is an essential characteristic of our investment philosophy. When a security’s valuation reflects pessimism about current challenges, we may see a potential long-term opportunity. We often find value in the higher-yielding segments of the market, where our research uncovers opportunities for durable long-term yield, including lower-rated investment-grade credit and some below investment-grade securities, typically fallen angels, or crossover credits. We also typically focus on Agency MBS and ABS whose valuation and risk profiles compare favorably to similar-duration Treasuries or high-quality credit issuers. 

We rely on detailed fundamental research as our primary risk mitigant at the security/issuer level as we see the main investment risks as permanent capital loss or loss of future purchasing power. We stress test investments across a range of economic, capital market, and issuer-specific scenarios, because we believe that downside risk analysis is paramount in assessing fixed income securities. At the portfolio level, we employ quantitative tools to monitor absolute and relative exposures and address any unintended and/or uncompensated exposures.