Adam Hetts, Global Head of Portfolio Construction and Strategy, talks with Head of U.S. Fixed Income Greg Wilensky about the challenges – and unique opportunities – associated with building bond portfolios in a world with historically low interest rates.

Key Takeaways

  • While the Bloomberg Barclays U.S. Aggregate Bond Index was once a good starting point for building diversified bond portfolios, it has increasingly become only that. Greg explains how the index’s inefficiencies can be exploited, enabling an active manager to potentially add value through higher returns, lower volatility, or both.
  • Despite the steepening U.S. Treasury yield curve, Greg views a sharp increase in rates or inflation as unlikely. The Federal Reserve’s (Fed) interest in stimulating the economy and investors’ demand for yield – coupled with U.S. rates being among the most attractive developed world government bonds – should moderate the rise.
  • Bond investors will need to balance the risks required to generate additional returns against sacrificing too much of the diversity they expect from bonds. Greg and Adam discuss how fundamental research and quantitative analysis may assist in both navigating the changing environment for bonds and building more optimal portfolios.

Tune in to Global Perspectives, a series where our investment leaders discuss the biggest market trends and implications for investors.

Adam Hetts, host of the Global Perspectives podcast series, leads the Portfolio Construction and Strategy (PCS) Team at Janus Henderson and, with his holistic view of markets, products and client needs, is a regular thought leadership contributor and speaker at industry events. The Janus Henderson PCS Team is available to advisors for customized model portfolio consultations. The team and its proprietary portfolio analysis capabilities provide support based on a whole-of-market view, focused on your needs and goals. We would be delighted to discuss in more detail the services the PCS Team can offer. Please visit the PCS section of our website or speak to your usual Janus Henderson representative.

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