Markets have reached all-time peaks and the cost of borrowing has plunged. While the level of corporate leverage is hard to ignore, it does seem – for the moment – that credit markets are functioning rationally. But in this environment, opportunities seem few and far between. As Jacko argues in his introduction to 360°, the tides are far out and fixed-income markets are fished almost to extinction.
Yet, as always, there are gems that an active approach can help identify. By combining a top-down look at the entire fixed-income universe with high-conviction, bottom-up security selection, we can improve our chances of finding any pearl-bearing oysters that are hiding among the rocks and crevices.
With risks hard to identify but very obviously there, now is the time for active management that will find opportunities to secure superior, risk-adjusted returns in a market which seems to be stretching the bounds of credulity.
See below for a flavour of some of the areas where we see particular value at the moment, or read the full report for a more comprehensive picture.