By devoting all of its resources to fixed income, Western Asset adds unique value to this asset class through active management of fixed income portfolios, with a value-oriented investment approach that is supported by a team of fixed income specialists in every market sector. This includes an extensive credit research team with experience of companies issuing both 'non-investment grade' and 'investment grade' bonds. Western Asset's expertise extends across multiple fixed income sectors around the world.
The firm's philosophy centres upon a team approach — where fixed income portfolios are managed by uniting groups of specialists dedicated to different market sectors.
Western Asset believes that significant inefficiencies exist in the fixed income markets. It therefore attempts to add value by exploiting these inefficiencies across the sectors in which it invests by combining traditional analysis with innovative technology. Western uses multiple strategies, including active sector and issue selection, to enhance value while at the same time preventing negative performance from any one strategy having a negative impact on returns. It then augments these strategies by engaging in opportunistic trading to exploit market inefficiencies over the course of an economic cycle.
Western Asset's strategic goal is to add value to client portfolios while adhering to a disciplined risk control process. To accomplish this aim, it targets four main strategies:
- Sector allocation (rotating between different sectors of the bond market)
- Issue selection (seeking to uncover mis-priced or undervalued securities)
- Duration exposure (adjusting its exposure to take account of interest rate movements)
- Attempts to take advantage of shifts in the relationship between short, medium and longer dated bonds.
- For global portfolios, country and currency allocations form a fifth crucial element.