Our perspective on global micro event and strategies.
As a solutions portfolio manager on the Alternative Market Premia Strategies Team, Carlos has fiduciary responsibility managing client portfolios across multi-manager and outcome-oriented investment solutions. He is responsible for designing, developing, and applying portfolio management and risk management in these portfolios. He also conducts research on risk factors, investment themes, and customized hedging strategies, and allocates client capital as suitable for each unique client objective using the team's proprietary risk framework. He works across investment teams, Trading, Product Management, and Portfolio Services to develop optimal trade constructions to minimize impact to client portfolios and mitigate investment, regulatory, and operational risks.
The fixed income market dislocations triggered by the onset of the COVID-19 pandemic left active portfolio managers with extraordinary opportunities to generate alpha not seen since the 2008 global financial crisis. Accordingly, many are well ahead of their benchmarks since COVID: The percentage of active core bond-plus and global aggregate bond strategies besting their benchmarks has spiked sharply to over 80% and 90%, respectively.1 Many fixed income allocators have, of course, benefited mightily from this recent spurt of active manager outperformance.
On the surface, there doesn’t seem to be a problem here, right? However, a closer look at this “golden era” of excess returns reveals potential structural manager biases and stylistic tilts that most investors may not expect, or necessarily want, from their fixed income allocation. These risk factor leanings have enabled many active managers to…