“In Fixed Income, there is no money to make, only losses possible”
“The massive uptrend of the long interest rates in the USA and now potentially Europe as well is a real challenge”
Such statements and other similar messages I hear very regularly. It wasn’t a sharp uptick over the full year, it was moderate (approx 60BP in a year)
Many investors hold to their investment style which was great in times of interest rates tending downwards.
But now it is about time to realise the returns made over years and reduce the (interest rate) risk, add a strategy which is resistent and well prepared for the actual market conditions.
Since summer 2016, interest rates have stopped declining. The risk one runs by appyling same investment behaviour as last couple years has been rising substantially, in particular as many do not provide a good carry.
Good news, there is a strategy for todays and tomorrows markets.
See the graph (July16 to Jan17), it tells you all. Red what I call classic strategy which worked well for years but not anymore, blue our favorite strategy. This carry approach is most likely again providing Libor + 250 and with this, overperform most of the classic approaches. No currency risk, very limited interest rate risk and working mainly in well known investment grade names.
Want to know more about it? We are very happy to show you more details. Just get in touch.