Getting Active with Fixed Income
April 20, 2022
As inflation abounds and more Fed rate hikes loom, Active Managers Council Steering Committee member MFS Investments has a new paper focusing on the role of active fixed income. The paper explains that fixed income can remain a viable part of portfolios despite the tightening environment but adds that active management is critical in managing fixed income risk.
In the paper, authors Joseph Flaherty, Natalie Shapiro and Derek Beane write that “by being active in the fixed income landscape, we are able to position the portfolios in the manner best suited to the prevailing market conditions.” They point out that through active management, MFS can “ensure that interest rate risk is managed” and that risks are “actively controlled” along the glide path of its Lifetime Funds. The active managers also pay close attention to geographic diversity and credit exposure.
The paper concludes by saying that active management will become even more critical as market uncertainty continues to bubble. “We believe active management will be critical to providing excess returns if we enter a low-return environment.”
Read more on the MFS Insights page.