As part of the rollout of three new liquid alternative mutual funds, Pioneer Investments has prepared a video titled “The Case for Liquid Alternatives in Fixed Income Portfolios” that features Thomas Swaney, Senior Vice President and Head of Alternative Fixed Income (U.S.) for Pioneer. Swaney covers the following topics in the 10 minute video:
- What are liquid alternatives?
- What is driving interest in liquid alternatives?
- The role of fixed income in a portfolio
- Seeking diversification through liquid alternatives
- Managing drawdown risk
- Liquid alternatives managers
In the video, Swaney makes the point that the majority of returns in broad based fixed income portfolios over the past 10+ years is due to duration. In other words, as interest rates have fallen, investors have benefited. He emphasizes this point by showing that the cumulative return on the Barclays Aggregate Bond Index falls from 65.7% over the 10-year period ending 12/31/12 to 3.7% when the benefit of duration is removed. He goes on to discuss how liquid alternative strategies can be used in a portfolio and reviews some of the considerations for evaluating different strategies.
Video Link: The Case for Liquid Alternatives in Fixed Income Portfolios