2009 Due Diligence Forum

Old lessons re-learned for income investors


Of Interest - Fixed Interest / Credit



Research Paper

The lesson of 2008 was that "income isn't income" – that is, not all fixed income strategies proved to be defensive, liquid and diversified. Nor were all strategies able to deliver consistent income and protect on the downside. Unfortunately, the lessons leaned during this most recent period of fixed income market stress are not new. This research paper revisits where some fixed income investors went wrong, and then provides insights to assist in evaluating the risks in fixed income. Finally, it shows how to construct genuinely defensive portfolios that focus on delivering the hallmarks of quality fixed income strategies - capital preservation, consistent income, diversification and maintaining sufficient liquidity - and demonstrates where the opportunities lie for investors going forward.


Michael Korber, Head of Credit, Perpetual