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Fixed Income Forum 2024
At our recent event, seven leading portfolio managers from across our investment teams shared their views on their area of specialism, explaining the current market outlook with reference to positioning across our core strategies.
The highlights below provide more information on the strategies that were discussed with links to videos and related fund information.
Funds in focus
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Find contact names, phone numbers and email addresses for RBC BlueBay's regional sales teams and client directors.
Presentation with Marc Stacey, BlueBay Senior Portfolio Manager, Investment Grade
BlueBay Investment Grade Financials Plus Bond Fund & BlueBay Financial Capital Bond Fund
- Bank credit spreads continue to offer an attractive pick-up versus corporates.
- The asset class we see offering the most attractive risk return opportunity to take advantage of this anomaly is the most junior part of banks debt stacks; Additional Tier 1 (AT1) securities.
- AT1 hybrid debt instruments were part of the regulatory response to the global financial crisis. The features inherent in these instruments lead to their exclusion from traditional fixed income indices, creating large pricing anomalies.
- In our view the dramatic improvements in the sector fundamentals, attractive macroeconomic tail winds and pricing anomalies make AT1 securities the most attractive risk return opportunity available in the credit spectrum today.
Presentation with Anthony Kettle, BlueBay Senior Portfolio Manager, Emerging Markets Debt
BlueBay Emerging Market Unconstrained Bond Fund & The Emerging Market Credit Alpha Fund
- EM sovereign yields remain highly attractive, at decade high. Both carry and possibility of total return are strongly positive. Despite robust fundamentals and attractive valuations, volatility in the near term could remain high.
- The EM unconstrained strategy aims to reduce the overall return stream volatility by taking a fully flexible approach combined with systematic hedging. The fund has managed to materially protect downsides in weak markets such as 2022 and capture upside in strong markets, such as in 2023.
- An Article 8 SFDR fund, it has a strong history of protecting downsides during periods of idiosyncratic weakness, such as during the Russian invasion of Ukraine in February 2022.
- For investors looking for an all-weather, active asset allocation product with total return bias, EM unconstrained has delivered a strong risk adjusted return and sharp ratio over its 12 year track record.
- It is a high conviction, best trade ideas portfolio where investors should remain comfortable that they are generating the best returns from the EM asset class possible.
Presentation with Justin Jewell, Head of European High Yield, BlueBay Senior Portfolio Manager
BlueBay Global High Yield Bond Fund & BlueBay High Yield ESG Bond Fund
- In high yield, the combination of high all-in-yields and falling duration creates a powerful forward total return profile and offers attractive compensation for the risk of spread or rate shocks over the medium term.
- The underlying technical dynamics for the high yield market are supportive, benefitting from strong investor demand.
- The credit quality of the high yield asset class remains very strong. While aggregate credit fundamentals are slowly deteriorating, they remain robust relative to historical trends.
Presentation with Russel Matthews, BlueBay Senior PM, Investment Grade
BlueBay Global Sovereign Opportunities Fund
- The macro environment is volatile on a number of different levels. Risk assets have performed well in 2024 on the back of expectations for the Federal Reserve to embark on a material rate cutting cycle. However, monetary policy remains in flux and there is uncertainty over the nexus of growth, inflation and policy that will continue to drive investment opportunities in our macro universe.
- In addition, we are in the midst of a global election cycle that encompasses North America, Latam, Europe and Asia. There are more people voting in material elections in 2024 than ever in history.
- In the immediate future, we see the biggest opportunity set in interest rate markets.
- Overall, directional risk is relatively low, given the top-down macro uncertainty. However, there are substantial opportunities presenting at an idiosyncratic level.
- In core rates markets we have high conviction in a short Japan rates trade, we see 10yr Japanese government bonds rising from 0.95% to 1.50% by year end. We also have high conviction in a curve steepening trade in the US. Short Long dated treasuries versus a long position in the 2yr part of the curve.
- In contrast, there are a number of Emerging Market countries where central banks have aggressively raised rates to counter inflation and where the yields offer great value versus the fundamentals. Yields in Mexico, Brazil and South Africa have the potential to decline in excess of 100bps over the coming months.
Presentation with My-Linh Ngo, Impact-Aligned Strategist, Responsible Investment
BlueBay Impact-Aligned Bond Fund
- The debt market has a critical and unique role to play in facilitating the sustainability transition - yet offerings for ‘positive impact’ have been limited.
- Asset class level expertise is critical to designing investment solutions which solve for differing investor ESG requirements.
- The BlueBay impact-aligned bond strategy is an innovative solution to investing in liquid global debt markets for both positive impact and returns.
- The strategy is an actively managed total return strategy, global and multi-thematic in nature, investing in corporates and SSAs, as well as in both conventional bonds across seven People and Planet sustainability themes.
Presentation with Tom Moulds, BlueBay Senior Portfolio Manager, Investment Grade
BlueBay Global Investment Grade Corporate Bond Fund
- Modestly Long risk (beta) - generic corporate spreads look fair but underlying demand for yield and reduced supply ahead mean technicals can take spreads from fair to outright expensive.
- Favour Europe over US; Banks over Non-Financials; compression positioning via subordination risk rather than cyclical risk.
- Expect regional, sector and issuer performance dispersion to continue to pick up and create bottom up alpha opportunity.
- In rates: positioned for curve steepening US – fiscal deficit requires term premium; short Japanese duration expecting further policy normalisation.
Presentation with Mark Dowding, BlueBay Chief Investment Officer
BlueBay Investment Grade Absolute Return Bond Fund & BlueBay Investment Grade Global Government Bond Fund
- BlueBay has a full suite of both benchmarked and alternative funds across fixed income.
- As we have seen in recent years what is attractive changes depending on market dynamics and clients specific needs.
- What doesn’t change is what drives “Alpha”. Alpha generation requires investment opportunity, positive manager skill and an investment process that gets this alpha into portfolios.
- At BlueBay our investment specialists make each investment decision once and then this is levered across our strategies dependent on their product designs.
- In this uncertain world, alpha opportunity seems more obvious than beta (market) opportunity.
Get in touch
Find contact names, phone numbers and email addresses for RBC BlueBay's regional sales teams and client directors.