1. DON’T BE DOGMATIC
While it’s important to have conviction in your thinking, the short-term, volatile nature of today’s markets can mean that hanging onto your investment view for dear life might not end well. You can lose a lot of money chasing two steps behind a choppy market.
2. REMAIN RESPONSIVE
The economic environment has undergone a huge shift over the past 12 months. Since the first US rate hike in March, we’ve gone from quantitative easing to tightening with rocketing inflation amidst a rising rate environment. Even the most confident investor needs to take the daily newsflow into account and adjust accordingly.
3. ACTIVE HEDGING COUNTS
One thing we’ve learnt this year is that an active hedging policy can be so beneficial. When you’re in an environment of real volatility and real repricing, being able to actively manage that risk given the poor liquidity of the underlying cash market has proven extremely important. We have been able to build positions that reflect our longer-term views earlier thanks to hedging.
4. GO UNCONSTRAINED
In an investment landscape that remains highly uncertain, we believe global unconstrained, benchmark-agnostic strategies offer the best way to capture upside potential amid the turmoil (while managing downside with active hedging). Unconstrained strategies give investors a broad geographic remit and employ a whole toolbox of instruments in order to access opportunities across the fixed income universe and capitalise on mispriced assets.
For more information on fixed income investing and where we see opportunities in 2023, download our outlook.
