Fixed Income Replacement

Traditional sources of income, such as government and investment grade corporate bonds, have struggled to generate sufficient returns and diversification to meet the evolving needs of retirees, pensions and long-term institutional investors.

We believe private investment-grade credit has been overlooked because it doesn’t fit neatly into the traditional asset allocation framework which has not kept up with the pace of innovation in credit markets.

This asset class can provide higher yielding, more diversified and less correlated exposure to public markets, offering a new way of thinking about fixed income generation.

The conventional assumption that private investments inherently carry more risk than public investments — in terms of liquidity, transparency, regulation, and issuer quality — is growing increasingly outdated, in our view.

If your investment goals have a long-term horizon, is illiquidity a risk to you? In reality, most fixed income investors don’t need fully daily liquid portfolios. By prioritizing liquidity over yield, investors may be sacrificing return potential without a corresponding benefit to their actual investment needs.

Traditional passive and active public fixed income strategies face inherent challenges:

• Passive strategies replicate public benchmarks, delivering low-fee beta exposure.
• Active public strategies contend with allocation constraints and limited capacity for index-diverging positions, impacting their overall performance.