Global Insights

Options for replacing fixed income’s defensive returns

Jeff Boswell and Jason Borbora-Sheen look at options for replacing fixed income’s defensive returns from the perspective of their respective strategies.

17 Jun 2022

2 minutes

Jeff Boswell
Jason Borbora-Sheen
Jeff Boswell and Jason Borbora-Sheen look at options for replacing fixed income’s defensive returns from the perspective of their respective strategies.

The fast view

Global Total Return Credit – Jeff Boswell

  • The current backdrop of persistent inflation and rising interest rates highlights the valuable role an unconstrained credit fund can play in investors’ portfolios.
  • Ninety One’s Global Total Return Credit Fund (GTRC) generates the bulk of its returns from credit spread moves and deliberately has a low sensitivity to interest rates. This has helped it outperform global bond markets during the recent sell-off, and in rising-rate environments more generally.
  • Rather than taking big top-down bets, GTRC explores bottom-up opportunities across a wide range of global credit markets. It takes a disciplined approach to screening investments and dynamically allocates to positions that appear best placed in the prevailing market environment.
  • The Fund’s flexible, benchmark-agnostic approach sees it stay away from any areas of the market that we believe are unappealing. This has proven vital for managing downside risk and providing a smoother return path than a high-yield bond allocation.
  • Using a proprietary framework, investments in the Fund are subject to a comprehensive sustainability appraisal. This includes an assessment of each underlying company’s effectiveness in navigating the transition to a low-carbon world.

Global Multi-Asset Income – Jason Borbora-Sheen

  • A combination of weaker growth, tightening policy and problematic inflation means bond investors face challenges on many fronts, with risks skewed to the downside.
  • Investors used to be able to rely on their fixed income allocation not just as a source of yield, but also as a means of mitigating equity losses. But with the bond market now more closely correlated with equities, fixed income can no longer fulfil that role.
  • Downside protection is one of the key aims – and achievements – of Ninety One’s Global Multi-Asset Income Fund. The Fund also seeks to capture the upside when it’s presented. To this end, any unwanted risk is hedged, but risk is dialled up when we expect it to be rewarded.
  • The Fund taps into the income and capital growth potential of well-managed companies’ shares (provided they are attractively valued) and aims to behave like the bond market in terms of volatility, albeit with significantly higher yields.
  • Built from the bottom up, but with every position carefully assessed for the impact it will have on the overall portfolio, the Fund aims to deliver consistent and resilient yield as this is a key determinant of investment returns.


Past performance does not predict future returns; losses may be made. All investments carry the risk of capital loss.

Specific risks
Currency exchange: Changes in the relative values of different currencies may adversely affect the value of investments and any related income. Default: There is a risk that the issuers of fixed income investments (e.g. bonds) may not be able to meet interest payments nor repay the money they have borrowed. The worse the credit quality of the issuer, the greater the risk of default and therefore investment loss. Derivatives: The use of derivatives may increase overall risk by magnifying the effect of both gains and losses leading to large changes in value and potentially large financial loss. A counterparty to a derivative transaction may fail to meet its obligations which may also lead to a financial loss. Interest rate: The value of fixed income investments (e.g. bonds) tends to decrease when interest rates rise. Liquidity: There may be insufficient buyers or sellers of particular investments giving rise to delays in trading and being able to make settlements, and/or large fluctuations in value. This may lead to larger financial losses than might be anticipated. Equity investment: The value of equities (e.g. shares) and equity-related investments may vary according to company profits and future prospects as well as more general market factors. In the event of a company default (e.g. insolvency), the owners of their equity rank last in terms of any financial payment from that company. Commodity-related investment: Commodity prices can be extremely volatile and losses may be made. Government securities exposure: The Fund may invest more than 35% of its assets in securities issued or guaranteed by a permitted sovereign entity, as defined in the definitions section of the Fund’s prospectus. Emerging and Frontier market (inc. China): These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems. Income Allocation: On some investments (e.g. the Implied Yield from Forward Foreign Exchange derivative contracts) any gains may be allocated to income rather than the capital account. This may cause greater fluctuations in the capital value of the fund. Income may be taxable.

General Risks
All investments carry the risk of capital loss. The value of investments, and any income generated from them, can fall as well as rise and will be affected by changes in interest rates, currency fluctuations, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which the investment strategy invests. If any currency differs from the investor’s home currency, returns may increase or decrease as a result of currency fluctuations. Past performance is not a reliable indicator of future results. Environmental, social or governance related risk events or factors, if they occur, could cause a negative impact on the value of investments.

Authored by

Jeff Boswell
Portfolio Manager
Jason Borbora-Sheen
Portfolio Manager

Important Information

This communication is provided for general information only should not be construed as advice.

All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

All rights reserved. Issued by Ninety One.