Absolute return fixed income is for investors looking to exploit the many anomalies in fixed income markets, where compelling levels of fixed income alpha can be delivered thanks to ensuring diversification of alpha sources and strict adherence to risk management policies regarding correlation, management of risk ex-ante and drawdown.
These long-short fixed income strategies enjoy much the same liquidity as traditional bond funds, as they use many of the same instruments, and are managed against cash. Being truly global and multi-sector in nature, they can target positive returns over the long term while targeting different risk levels, ranging from 350 bps of annualised volatility (low volatility portfolios) to 700 bps (medium volatility portfolios).
We can tailor mandates to meet investors’ particular needs and offer a number of UCITS-compliant funds that meet a broad range of investor requirements.
EUR 2.8 bn
assets under management (as at March 2018)
investment professionals leveraged
sources of return
Head of Absolute Return Fixed Income
Alex Johnson is the Head of Absolute Return Fixed Income BNP Paribas Asset Management. He is responsible for the management, growth and development of global absolute return strategies, and he is the portfolio manager for multi-strategy absolute return portfolios. Alex joined FFTW, a predecessor of BNP Paribas Asset Management, in 2008 and is based in New York. Prior to his current role, Alex was Co-Head of Global Fixed Income for FFTW and Head of Portfolio Management prior to that. He also was Senior Portfolio Manager at Fortis Investment Management, and part of the Global Fixed Income team at BlackRock. Alex has over 20 years of global fixed income portfolio management experience. He holds an MA in Law from Balliol College, University of Oxford and an LLM in Law from the University of Virginia.
Hear from Alex Johnson
Head of Absolute Return Fixed Income
Investment Philosophy and Process
We believe that no one source of return should dominate in the long-run because diversification increases risk-adjusted return, and the flexibility allows for positioning for different environments in different asset classes, and in different ways. As such, the absolute return investment process is based on four core beliefs:
- Diversification delivers more consistent returns than concentration
- Quantitative approaches enhance quantitative judgment
- Specialized and accountable managers make better decisions
- Risk management is as important as the search for returns
In order to achieve the investment objective, the absolute return investment team decides upon the risk allocation to a full suite of independent specialist alpha teams aiming to deliver uncorrelated alpha sources, capturing a broad set of opportunities as well as the benefits of diversification.
Utilising more than 80 investment professionals, the BNP Paribas Asset Management global fixed income platform offers a wide opportunity including government bonds, developed and emerging markets, inflation-linked bonds, currencies, structured securities and credit.
The approach places strong emphasis on drawdown management: this is for investors looking for yield in a difficult interest rate environment where risk awareness and enhanced diversification are the key features. Having a track record demonstrating low correlation with rates and global fixed income as well as other major asset classes such as equities, currencies and commodities, we believe the BNP Paribas Asset Management absolute return fixed income investment team is well positioned to maximise investor returns in most market conditions, allowing portfolios to deliver fixed income returns independent of the direction of interest rates.
Multi-Strategy Absolute Return
Absolute return fixed income is for investors looking for yield in a difficult interest rate environment where risk awareness and enhanced diversification are the key features. The approach puts drawdown management at the core of its process.
Having a track record demonstrating low correlation with rates and global fixed income as well as other major asset classes such as equities, currencies, and commodities, we believe the absolute return fixed income investment team is well positioned to maximise investor returns in most market conditions, allowing portfolios to deliver fixed income returns independent of the direction of interest rates.
- Over 12 years’ experience managing long-short fixed income, utilising the expertise of focused and seasoned fixed income alpha teams.
- Aiming to deliver consistent risk-adjusted returns independent from directional moves in interest rates by exploiting a variety of market inefficiencies.
- Focus on drawdown management, with execution built on a rigorous risk budgeting framework and monitored by an independent risk management team.
- Aiming to obtain diversified exposure to fixed income sectors – with no one investment theme dominating over time as demonstrated by historical low correlations across alpha sources within the portfolio.
- Low average correlations to fixed income beta and other asset-class betas, including rates, credit, equities and commodities.