That’s one of the key reasons we would suggest looking at a more flexible approach to fixed income investing, known as unconstrained investing. Specifically, we would suggest you consider an adaptable, go-anywhere fund that seeks to capitalize on evolving market trends—one like BlackRock’s Strategic Income Opportunities Fund (SIO).
As a manger of SIO, my team looks around the world for opportunities, investing in areas of the market that are held less frequently by traditional funds (such as U.S. and international high yield, non-U.S. sovereign debt, emerging market sovereign and corporate debt, bank loans, and securitized instruments). And, more to the point, SIO can invest without many sector, credit rating, maturity or geographic limitations, meaning that the fund can adapt quickly to change duration, sector positioning or geographic allocation as our views evolve. Investing in these areas of the market may carry additional risks not found in traditional bond funds.
To see how this has worked in practice, click below to launch an interactive chart showing how SIO has remained flexible over the years.
Clearly, there’s no magic bullet that can solve the bond conundrum of rate volatility and rapidly changing markets, but investing in a flexible, all-in-one fixed income portfolio that is not tethered to a benchmark should be a consideration.
Rick Rieder, Managing Director, is BlackRock’s Chief Investment Officer of Fundamental Fixed Income, Co-head of Americas Fixed Income, and a regular contributor to The Blog. You can find more of his posts here.