The term alternative fixed income can carry a variety of meanings, with interpretations differing among market participants. The definition often depends on an individual’s or firm’s perspective and experience. For some, it includes hedge fund strategies that employ dynamic, non-traditional approaches to fixed-income markets. Others associate it with private credit, which involves lending directly to businesses and projects outside traditional banking channels, as well as structured credit products or esoteric debt instruments. Still, others may include various strategies or instruments that are not rooted in fixed income but exhibit similar risk-return characteristics, complementing or even superseding traditional fixed-income investments.
The breadth of the alternative fixed-income universe is both its strength and its complexity. It spans investments with varying liquidity profiles, risk levels, and return drivers. This diversity means that different investors adopt different definitions depending on their objectives and constraints. HedgeNordic’s publication on “Alternative Fixed Income” aims to explore this diverse and dynamic space, featuring insights from allocators and asset managers alike. Whether you’re an allocator, a fund manager, or an industry professional, we hope this edition provides a comprehensive understanding of the opportunities and complexities of alternative fixed income.
Highlighting some of the content, the Nordic team at Aegon Asset Management share their definition of alternative fixed income and their wide range of strategies in “Harnessing (Solvency II) Expertise and Scale in Alternative Fixed Income.” Anders Persson, CIO and Head of Global Fixed Income at Nuveen, explores alternative credit sub-asset classes in “Investing for Resiliency with Alternative Credit.” Marie Lindskog, Head of Alternative Investments at Afa Försäkring, highlights that Private Credit is “A Natural Part of Our Portfolio,” discussing the role of private credit in a portfolio and the importance of manager selection.
In the high-yield segment of the fixed-income universe, Christoffer Malmström and Måns Levin, co-founders of Swedish fund boutique Ridge Capital, assert that “Active and Opportunistic Beats the Monkey in High-Yield.” Meanwhile, in “High Yield: Resilience Amid a Shifting Backdrop,” Scott Roth and Chris Sawyer from Barings highlight that high yield remains well-positioned within a macroeconomic environment that presents both opportunities and challenges. Additionally, the team at Norwegian asset manager Sissener AS is “Breaking Free from UCITS Constraints” with the launch of a new credit fund designed to capitalize on the flexibility offered by the RAIF structure.
Thor Abrahamsen, Senior Investment Executive at Norwegian maritime insurer Gard, presents “Gard’s Playbook for Short-Duration Fixed-Income Investing,” offering insights into corporate credit, high-yield bonds, and private credit. Eric Larsson, Managing Director, Co-Head, and Portfolio Manager at Alcentra – a Franklin Templeton manager – delves deeper into private credit markets by discussing “Opportunities Amid Complexity in European Special Situations.”
In “Unlocking Opportunities in the Central Bank Cutting Cycle,” Kristian Myrup Pedersen, Quant Director at Danish fund boutique CABA Capital, introduces CABA’s Flex strategy which invests in Scandinavian AAA-rated covered bonds by isolating the spread premium and enhancing expected returns through the strategic use of leverage. Expanding the Nordic perspective, Halldór Grétarsson and Hjörleifur Waagfjörð from Arion Bank discuss alternative fixed income as “A Growing Asset Class for Icelandic Investors,” highlighting the increasing relevance of this asset class in Iceland.
We hope this publication sparks insightful discussions and provides readers with the tools and knowledge to capitalize on the opportunities within the evolving alternative fixed-income universe.
We hope you enjoy the read and find some interesting insights and food for thought.
Please find the report here. Happy reading!
