Global Multi-Sector Video | MFS Active Global Fixed Income Strategies

VO: At MFS, our specialized GLOBAL MULTI SECTOR TEAM of portfolio managers, analysts, and researchers work together creating a unified approach based on shared global insights and long-term conviction.

 Pilar Gomez-Bravo: Our investment philosophy serves as the anchor to our investment process and is based on four key tenets. The first one is having a global multi-sector fixed income universe provides the largest amount of mispriced risk premia, and therefore, blending effects rates and credit exposures can give us better risk adjusted returns. Secondly, we believe that sectors diverge meaningfully over time and through market cycles, and being able to take advantage of these dislocations also provides an important source of alpha. Now, it's really important to have a process that is nimble and dynamic to take advantage of these divergences. Thirdly, and interestingly, security selection is also an important source of alpha and opportunities, especially because it compounds nicely in good times and in bad times. And really for a source of alpha to shine, you really need a strong global research platform. And finally, these are complex portfolios and therefore a strong focus on risk management and portfolio construction is imperative. And we do this by working with independent risk oversight and also with our strong team of research analysts, which protect the portfolio from the bottom up.

VO: At the portfolio level, the team manages risk by focusing on allocation and risk budgeting along with views on the macro environment, fundamentals and valuations. (PM) Robert Spector: How do think about the allocation of risk across regions and sectors?

So the degree of active risk we want to take is driven by incorporating a range of perspectives across the MFS investment platform. Top-down macro views, bottom-up fundamentals from the corporate sector and quantitative frameworks. The higher degree of alignment across these inputs helps drive conviction. In addition to the amount of risk we want to take, risk budgeting also involves allocating risk between duration and credit. In a global fixed income context, it's really important to think about the correlations of these key drivers. The second phase of our process is asset allocation, where we look to distribute this risk across key global sectors. For example, investment grade and high yield corporate bonds, emerging market debt, government bonds, and securitized credit. Like risk budgeting, this process is highly collaborative where we integrate the views of sector portfolio managers, but also quant and our traders. It is this alignment and collaborative process that really helps drive conviction.

VO: Open dialogue and connection are key to our active fixed income approach and why our global investment teams regularly share information.

Gaetan Poirier: Research ideas get into portfolios through active collaboration and a strong partnership between analysts and portfolio managers. Research analysts at MFS are passionate investors who are responsible for bottom-up ideas and effectively communicating these ideas to portfolio managers across our investment platform. The goal is then to match these buy-rated securities that fit the risk budget that portfolio managers are looking to express. Sector portfolio managers are the ones who add these securities to the global multi-sector portfolios based on the portfolio manager's asset allocation decision. Security selection is a foundational alpha driver for all portfolios at MFS. Our analysts are tasked with rating securities buy-hold-sell based on several factors like the financial health of the company, the quality of the management team, ESG factors, technicals, curves, subordination, currency, and valuation. Our credit analysts are part of a large and highly collaborative global research platform where formal and informal meetings regarding industry insights and investment ideas are discussed alongside portfolio managers to help drive better decisions for clients.

VO: Our disciplined actively managed approach offers clients access to comprehensive Fixed Income expertise, a range of strategies, and active returns for long-term goals.

Owen Murfin: So while many multi-sector portfolios gain their sector exposure via existing mutual funds or derivatives, we look to gain this sector exposure through underlying cash bonds reflecting the highest conviction views of our experienced research platform. What this means then is both security selection as well as asset allocation are key to driving outcomes for clients. And this is highly consistent with our philosophy. The second thing is we've demonstrated strong long-term track records on a risk-adjusted basis. We've also aimed to focus on protecting downside risk through the appropriate use of hedges, but also dynamic use of portfolio beta relative to the benchmark. And then lastly, we have both this scale as well as resources to provide excellent client service. This provides strong underlying transparency to portfolios, but also ongoing access to our investment teams.

Investments in debt instruments may decline in value as the result of, or perception of, declines in the credit quality of the issuer, borrower, counterparty, or other entity responsible for payment, underlying collateral, or changes in economic, political, issuer-specific, or other conditions. Certain types of debt instruments can be more sensitive to these factors and therefore more volatile. In addition, debt instruments entail interest rate risk (as interest rates rise, prices usually fall). Therefore, the portfolio’s value may decline during rising rates. The views expressed are those of the author(s) and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice. No forecasts can be guaranteed.

 

The views expressed are those of the speaker and are subject to change at any time. These views do not necessarily reflect the views of MFS or others in the MFS organization, and should not be relied upon as investment advice, as securities recommendations, or as an indication of trading intent on behalf of any MFS investment product.

 

This material is for information only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. Any securities and/or sectors mentioned herein are for illustration purposes only and should not be construed as an investment recommendation. Investment involves risk. Past performance or any prediction, projection or forecast is not indicative of future performance. The information contained herein may not be copied, reproduced or redistributed without the express consent of MFS. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, MFS does not give any warranty or representation, expressed or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. MFS accepts no liability for any loss, indirect or consequential damages, arising from the use of or reliance on this material.

 

The views expressed are those of the author and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as a solicitation or investment advice. No forecasts can be guaranteed.

 

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