Credit Crunch: Vontobel’s Jackson Talks Credit Relative Value

Vontobel's Andrew Jackson, Head of Investments and Head of Fixed Income Boutique, discussed credit relative value on Bloomberg Intelligence's "Credit Crunch" podcast, advocating for active management as a primary driver of returns. Jackson's insights covered strategies for generating alpha through thematic and instrument-specific trading, relative value opportunities between emerging and developed markets, and across regions like Europe and the US, alongside an analysis of current risk pricing and beta versus alpha exposures.

Analysis

In a recent Bloomberg podcast, Vontobel's Head of Investments, Andrew Jackson, articulated a strong case for active management within fixed income portfolios. The core of his strategy is to derive a significant portion of returns from alpha-generating activities rather than relying on broad market beta. Jackson specified that this involves actively trading based on themes, selecting individual instruments, and capitalizing on relative value opportunities. He explicitly highlighted potential dislocations between emerging and developed markets, as well as between European and U.S. credit. The discussion also covered current risk pricing across credit markets, suggesting a focus on identifying mispriced assets. The neutral sentiment and low market impact score indicate this is an expert insight piece intended to frame investor thinking rather than a direct market catalyst.

Key Decisions for Investors

• Investors managing fixed income allocations should evaluate the potential for alpha generation through active management, as opposed to relying solely on passive beta exposure.
• Consider exploring relative value trades, specifically by analyzing the current risk-reward dynamics between emerging market and developed market debt, as well as between U.S. and European credit.
• It may be prudent to implement thematic or instrument-specific strategies to capture value, reflecting the view that targeted trades can outperform broad market movements.