A static fixed income allocation was built for a world that no longer exists. The price-insensitive central-bank buyer that suppressed volatility and kept bonds negatively correlated to equities has disappeared at a time when inflation and fiscal sustainability risks are at the forefront of investors’ minds. This new regime demands an unconstrained, absolute-return approach – absolute return fixed income is the diversification prize. However, absolute return strategies can differ substantially in flexibility and exposures. A factor-based framework can help investors understand which characteristics to look for when assessing these strategies.