We build portfolios by focusing on the investment objectives of our clients rather than the weights of a generic benchmark. In 1999, we began managing Core Fixed Income portfolios for insurance companies, partnering with them to build investment solutions tailored to their unique objectives, including risk and asset-liability management, regulatory support, and rating agency support. This objectives-driven approach provided the foundation for our Core and Core Plus strategies, which we have expanded to meet the complex challenges faced by other institutional investors, including public and corporate pension plans and endowments and foundations.
We believe that capturing attractive yields, while remaining focused on the preservation of capital, is the surest path to superior investment results.
Our large fixed income team uses a fundamental credit-intensive investment process that incorporates our knowledge of issuers, structures, and industries. We invest across the full spectrum of the fixed income market, including asset-backed securities, investment grade and high yield corporates, bank loans, residential mortgage-backed securities, commercial mortgage-backed securities, and municipals. Many of the securities we research are not included in the Bloomberg U.S. Aggregate Index and are often overlooked by other investors.
Active management is a key element of our strategy. We employ opportunistic positioning at the sector and security level with a strong emphasis on relative value, rather than index weightings. Portfolios are constructed from the bottom up and positioned to reflect Guggenheim’s macroeconomic analysis and themes.
Solution to the "Core Conundrum"
Traditional core fixed income portfolios typically resemble the Bloomberg U.S. Aggregate Index. Today, this index consists primarily of low-yielding government-related debt, making it more difficult to meet total return targets.
Against this backdrop, many investors have simply lowered credit quality and extended duration to generate yield. While these investment shortcuts may produce short-term gains, they leave investors exposed to downside risk that can erode long-term returns.
At Guggenheim, we have the resources and expertise to seek to uncover value in under-researched areas that are not included in the Bloomberg U.S. Aggregate Index, including ABS and other structured securities and off-the-run credits. We believe this approach to portfolio construction may help generate higher yields without adding undue credit or duration risk.
Complementary Within a Multi-Manager Framework
Our track record, investment approach and asset allocation has shown over time that the strategy can be complementary within a multi-manager framework.
We believe that our Core Fixed Income strategy is a compelling solution in all environments and can help institutional investors navigate the challenges that likely lie ahead.