Trying to predict the reactions and counter reactions of markets to political or economic events is inherently challenging. It’s also highly subjective, and at times, such macro bets can overshadow returns from actual credit selection. That’s why we often hear from investors looking to diversify their credit line-up with complementary strategies that offer consistent return potential through active security selection. Systematic Credit strategies could offer an ideal solution.
The Quant Revolution in Credit
Advancements in technology and the electronification of credit trading have sparked a quant revolution, rapidly reducing transaction costs and giving rise to the latest generation of active systematic credit portfolios using a dynamic, multifactor approach.
We can now rapidly analyze vast datasets, run in-depth factor research and identify the most profitable factor combinations. Because of the low correlation between factors, we can create well-diversified portfolios where security selection drives return.
Long a tool of equity investors, systematic investing now represents a compelling alternative for fixed-income investors, providing the potential for:
• Highly competitive excess returns
• Security selection as the primary driver of returns
• Well-balanced portfolios with diversified risk exposures
• Stable performance relative to traditional credit managers
• Low correlation with traditional credit portfolios
• Low cost, efficient solution
We invite you to join American Century Investment’s Muting Ren, Head of Systematic Credit and Elaine Bourke, Head of Fixed Income and Multi-Asset Client Portfolio Management as they discuss insights relevant to today’s volatile macro and political climate, the role of electronic trading in unleashing new opportunities and their approach to systematic credit.
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