Focus on risk balancing, not picking the winners

Karsten Bierre warns of dangers of 'picking the winners'

When most fund managers discuss fixed income investing, particularly in credit markets, many will unsurprisingly stress the importance of security selection.

Indeed, when trying to beat a benchmark, there is no doubt 'picking the winners' and 'avoiding the losers' is crucial.  But is this the only way of generating attractive returns from fixed income markets? Our multi-asset team does not believe so. Instead of trying to identify winners and losers within thousands of individual securities, we believe another equally rewarding opportunity lies in combining attractive risk premia across the fixed income universe. However, with no benchmark, risk becomes a key factor. Within fixed income in particular, our first objective is to identify the...