Credit Roundtable 2024

As investors face a confluence of economic factors – interest rates, inflationary pressures, geopolitical uncertainty and shifting market dynamics – successful credit portfolio construction demands a balance of risk mitigation, capital appreciation and alignment with long-term portfolio objectives.

How do investors build a well-diversified and robust fixed income and credit portfolio across the cycle?

As George Lin articulated in an earlier [i3] Insights editorial, the main objectives of investing in fixed interest assets are as follows:

• Firstly, the portfolio needs to generate income and return.
• Secondly, the fixed interest portfolio should be diversifying to equities.
• Thirdly, to provide sufficient liquidity especially at a time of market dislocation.

 

Building blocks for a credit portfolio may include a range of instruments, such as corporate bonds, asset-backed securities, high-yield bonds, sovereign debt, emerging market debt and private credit.  Plus, possible idiosyncratic exposures to special situation or distressed opportunities.

However, the trade-off between return, diversification and liquidity is often challenging.

As the global economic landscape continues to evolve, the need for agile and adaptive credit portfolio management becomes more important.

In this roundtable co-hosted with Allspring Global Investments, we will discuss how institutional investors structure and construct a robust credit portfolio.

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