CHAPTER 20
The Art of Fixed Income Portfolio Investing300
Chris P. Dialynas Managing Director–Portfolio Management Pacific Investment Management Company
The global fixed income portfolio manager’s task is to select the optimal combination of fixed income securities and currencies to outperform, on a risk-adjusted basis, a specified fixed income market benchmark index whose characteristics may include global or local, investment grade or high yield, short or long duration, or inclusive of all these characteristics, among many others. Additionally, the global fixed income portfolio manager will strive to post favorable performance versus competitors. But, collectively, the goal of fixed income portfolio management is to provide a meaningful investment result for clients that will complement any multi-asset class portfolio.
Global fixed income portfolio managers must make complex investment choices among the universe of global fixed income products. All global issuers of debt that rely on the public markets for capital, compete for the portfolio manager’s investment capital. Issuers that offer securities with the highest risk-adjusted returns will be most attractive to the portfolio manager who selects among these global investment opportunities in such a way that is designed to outperform a benchmark index. Inherent in the investment decision are choices on duration, country, sector, ...
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