Meeting investment goals with a traditional portfolio of bonds and equities is likely going to get more and more difficult. The traditional approach of bonds and equities worked well in an era of all-time low interest rates and suppressed volatility. We believe that today’s asset valuations are at elevated levels, and so forward-looking return expectations are considerably lower than many of us have become accustomed to.
Many investors we speak with still have an investment portfolio that we believe is built for the last ten years and not the next ten.
At RPIA, we focus on two things. First, helping investors take the important first step of getting more out of their current fixed income allocation. Second, providing access to actively managed bond strategies that could augment overall portfolio returns, offering capital preservation and provide portfolio diversification benefits.
When it comes to getting the most out of your current bond allocation, we believe that actively managed corporate bond strategies offer investors an attractive risk-return proposition. This is an area of the market where there are significant inefficiencies. As a result, many active managers have had success in beating their benchmarks. Given that bonds often make up 40% of a portfolio, extracting more value from this allocation can have a significant impact on an investor’s overall return.
Beyond simple fixed income allocation, in the new environment we believe investors should be looking for niche strategies that can generate an attractive risk-adjusted return with strong risk management. We have deep expertise in managing portfolios of corporate bonds in innovative ways. Armed with deep security selection experience and the tools to manage or minimize unwanted risks, we believe that we have an ability to deliver attractive risk-adjusted returns with modest correlation to traditional asset categories.In an era of low interest rates and lofty valuations for all asset classes, the portfolio construction challenge is particularly acute. We offer a number of strategies that we believe could help investors achieve their risk-return objectives.