Strategy overview

The U.S. Unconstrained Bond strategy aims to deliver a total return of cash plus 400 basis points (gross) per annum over a full market cycle, limiting overall duration risk, and maintaining a strong focus on capital preservation.

The strategy is not managed to an index. The core investment universe is predominantly USD denominated investment grade rated fixed income securities, but the team can also take advantage of a global opportunity set in areas such as high yield, loans, emerging market debt as well as other fixed income asset classes to capture alpha.

As part of the execution of the strategy, we may also employ derivatives to position the portfolio and manage risk. Derivatives used may include, but are not limited to exchange-traded options, interest rate swaps, bond futures, credit default swaps and currency forwards. No borrowing or financial leverage is permitted.

Our approach

To achieve the portfolio’s investment objectives, the investment process primarily consists of the following elements:

• Anchored by proprietary fundamental research, we employ an active approach, tactically positioning the portfolio to take advantage of near-term opportunities presented by movement in relative valuations.
• The main performance drivers are term structure, credit alpha, credit beta, and, to a lesser extent active currency positions.
• The strategy has a bottom-up portfolio construction process that implements the team's strongest conviction ideas, adjusted to reflect the desired top down macro view with regards to duration and spread duration.
• Based on the our conviction ratings across eligible alpha sources, we construct a diversified portfolio to mitigate performance risk associated with individual strategies or single name credit deterioration and default, while maximizing risk-adjusted returns.
• The BlueBay Fixed Income Team believes that taking into account environmental, social and governance (ESG) factors is an important aspect of the investment process. As such, ESG integration – the systematic review of material ESG investment risks – is applied across all of our strategies.

U.S. fixed income expertise

Our U.S. fixed income capabilities are supported by a well resourced and experienced group of US-based investment professionals, led by Andrzej Skiba, Head of U.S. Fixed Income. This group includes specialists in Investment Grade, Leveraged Finance, Securitized Credit, Impact Investing and Liquidity Management. As part of an integrated global fixed income team, our U.S. fixed income presence enables us to access the breadth of investment opportunities available in U.S. fixed income markets to deliver domestic as well as global portfolio solutions to clients.