Within liquid alternatives, there has been growing interest in alternative fixed income and credit strategies. These strategies make use of a wide range of tools, such as shorting, leverage and derivatives, to deliver attractive absolute returns and low correlation to traditional asset classes.
However, investor interest in these strategies is particularly pronounced today given the significant opportunity presented by dispersion, asymmetry and volatility in debt markets.
Interest in liquid alternative fixed income and credit strategies (hereafter “liquid alts”) comes at a time when family offices are looking to increase exposure to areas such as fixed income and private debt. Some 38% of respondents to the 2023 UBS Global Family Office Report signalled their intention to allocate more to fixed income over the next five years, while 26% plan on increasing their allocations to private debt1.
In liquid alts, family offices have a flexible and liquid solution that can provide access to a wide variety of debt instruments.
A strategy for every situation
There is no such thing as a ‘typical’ liquid alts strategy. Instead, there is a wide range of approaches to choose from.
For example, macro strategies aim to deliver returns despite significant market uncertainty. With a range of economic and geopolitical challenges facing many governments today, policy and politics will play a key role in driving price action in global sovereign debt markets. Flexible strategies underpinned by deep fundamental analysis, such as BlueBay’s Global Sovereign Opportunities strategy, can take advantage of ‘capturable volatility’ in these markets: namely opportunities for alpha that are driven by volatility as opposed to the direction of government bond markets.