Global Aggregate Bond
The investment objective of Global Aggregate Bond is to outperform the Barclays Global Aggregate Bond Index by 200 (gross) basis points per annum over a market cycle.
Schroders Global Aggregate Bond offers an active, research-driven approach that aims to deliver strong performance from global fixed income bonds and currencies. A key focus of the strategy is to diversify opportunities by source of return, investment style and time horizon in an effort to generate consistent alpha over a market cycle.
Diversified sources of return include duration, yield curve, country allocation, currency, credit beta, credit sector, and idiosyncratic/relative value. By investment styles we mean the combination of judgmental and quantitative techniques, and by time horizons we mean blending longer term strategic positions with shorter term tactical opportunities to further diversify the return profile of the portfolio.
The Global Multi-Sector team is supported by Schroders integrated and experienced fixed income team of over 100 fixed income specialists across the globe.
The strategy’s management team follows the philosophy that sustainable alpha generation is driven by skill and diversification. Diversification is achieved by alpha source and time horizon. We actively manage portfolios using a risk budgeting approach, allocating risk to positions where we believe there is sufficient mispricing to warrant an allocation of risk to a view or market.
To help us determine such mispricing’s we use fundamental, research-driven analysis together with technical analysis. Care is taken to diversify the positions in the portfolio which is a blend of risks often including cost effective offsetting positions. These offsetting positions are expected to perform should the central themes be proven to be inaccurate.
Finally, given the global nature of economies and markets it is critical that the team draw upon the expertise offered to us by our regional specialists thereby allowing us to access local market intelligence.
As active investors, the Global Multi-Sector team’s approach is designed to generate alpha using a repeatable, scalable and transparent investment process. We identify investment themes in the global macroeconomic environment that frame our strategic outlook and reflect our views on the secular drivers of financial markets. Our approach is truly global, and all markets are analysed in detail to find and implement trades that express these themes in the most efficient way. At any given point, our portfolios are invested according to 3-5 well-researched themes with an investment horizon of 3-12 months.
Generating alpha in all market conditions requires diverse sources of alpha and time horizon. We believe this is more effective than diversifying portfolios by simply holding a large number of positions. Sources of alpha include interest rates (duration, country and curve), credit (beta, sector and relative value) and inflation, principally in developed markets. We diversify across time horizons by blending longer-term strategic views with shorter-term tactical views.
Environmental, Social & Governance (ESG) considerations are integral to our top-down macroeconomic thematic investment process and is applied across both sovereign (emerging and developed markets) and credit allocation decisions. The Global Multi-Sector team was awarded its ESG integration accreditation in September 2019. However, we have long recognised that non-financial factors, including environmental, social and governance issues have a material influence on the relative attractiveness of fixed income assets. Integrating ESG considerations alongside traditional metrics for fixed income analysis is consistent with, and indeed supportive of, our goal of delivering the best risk-adjusted returns for our clients.
- The Schroders Global Aggregate strategy seeks to outperform the Barclays Global Aggregate index by investing primarily in investment grade securities issued by governments, government-related entities and corporates from around the world, with up to 20% exposure to high yield securities.
- The portfolio may also utilize active currency management in both developed and emerging currencies for the generation of alpha and diversification of risk.
- Derivatives are allowed and used to hedge and obtain active risk in the Fund. Derivatives used include: interest rate futures, interest rate swaps, credit default swaps and currency forwards.
- Separate Accounts