The Importance of Style in Fixed Income Investing
Vanguard's Ales Koutny discusses the luxury of taking time and waiting for the right investment opportunity to come along.
By Ales Koutny, head of international rates, Vanguard
When it comes to investing in equities, there is often a debate about the merits of investing with either a value or growth bias. For much of the last decade, especially with the recent rise of tech, it has been the growth investors who have enjoyed the bulk of returns, but in the last two years the case for value has very much returned to the fore.
However, with regards to actively investing in fixed income assets, the topic of style is a much less discussed one, despite the impact it can have on returns. Without a style diversifier, an investor can easily end up with having all their money invested in government bonds, or all of it in corporate bonds, and never pick much of a risk-adjusted return.
Author's summary: Style matters in fixed income investing too.