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Policy & politics
Driving alpha opportunities for our investors
The concept of ‘policy & politics’ as a driver of returns has been one of the core foundations within the investment process of the BlueBay fixed income investment platform since its inception in 2001.
We believe that secular trends like geopolitics create pockets of volatility, which in turn create alpha opportunities for investors.
To us, this means understanding the discussions politicians, policymakers, think tanks and other related stakeholders are having, anticipating how this may impact the outcome of their decision-making process, and tying it back to the likely impact it may have on markets.
How we do this
We do this by maintaining appropriate contact with these individuals, knowing the right questions to ask and when to ask them. Cultivating a relationship of information sharing and education.
The human nature of political and policy decision-making does not lend itself well to investment approaches founded on artificial intelligence or quant models. We believe it is possible to gain an investment edge-through proprietary research, exploiting news bias, and utilising social media.
Understanding conventional wisdom and when it is likely to be proven wrong is a key component in monetising volatility.
We believe our ability to effectively and consistently identify these makes us a leader within our field.
What does this look like in practice?
Click through the below case studies to see how our approach to policy & politics plays out in real life.
The threat of Grexit
When the European sovereign debt crisis started in 2009 we followed the unfolding of events closely and profited on both our short and long positions.
The ‘surprise’ of Brexit
Fewer than a third predicted the UK would vote to leave the European Union.
Pemex & Mexico – a seat at the table
We are in constant contact with the finance ministry and central bank in Mexico to discuss fiscal and monetary policy respectively.
Mark Dowding, BlueBay Chief Investment Officer
BlueBay’s Chief Investment Officer, Mark Dowding talks us through what he sees as being different about BlueBay’s investment approach when it comes to policy & politics.
“Having specialists meeting regularly with policymakers has been one of our competitive strengths.”
What do our experts think?
Hear more on policy & politics from Jana Harvey, Kaspar Hense and Timothy Ash.
Graham Stock, Senior Emerging Markets Sovereign Strategist
According to Graham Stock, one of our Senior Emerging Markets Sovereign Strategists:
“Analysing policy & politics is critical for sovereign fixed income analysis. At the end of the day, the drivers for the performance of bonds issued by governments are their fiscal policies and the performance of the economy.”
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