We believe portfolio construction can provide an independent alpha source in addition to security selection and sector allocation.
Unorthodox Portfolio Construction in Uncertain Times
Franklin Templeton Fixed Income IG team's proprietary portfolio construction model incorporates an embedded downside constraint designed to weather bear credit market environments to help investors avoid drawdowns and achieve more consistent outcomes over market cycles.
Is There a Better Way to Build Credit Portfolios?
Josh Lohmeier, SVP Investment Grade Credit, thinks so. Hear more about how managing credit portfolios in New Zealand forced him to re-think portfolio construction, and in the process, helped him uncover new and uncorrelated sources of alpha in credit markets.
FRANKLIN US INVESTMENT GRADE LONG CREDIT STRATEGY
Strategy Overview
The strategy seeks to maximize investment returns subject to its risk budget through a combination of income and capital appreciation, by investing in U.S. dollar-denominated investment grade corporate bonds.
Portfolio Construction
Explicit Volatility Management
Our managers believe that risk management of the portfolio on the downside should be an essential component of any credit investment process given the asymmetry of returns. As a result, our portfolios have explicit constraints built-in to quantitative models, to help provide resilience in down markets.
Low Correlation
The team’s custom sector framework and portfolio construction methodology provide a complementary risk/return profile relative to top industry peers. By breaking down credit markets in a distinct manner, our strategy seeks to add value through the utilization of additional sources of return and risk reduction.