Bond managers adopting absolute-return strategies; Pulling out the stops to increase alpha.(News)

Investment News, August, 2005

Byline: Joel Chernoff SAN FRANCISCO - Move over, traditional fixed income. Absolute-return strategies have arrived. A growing number of "best ideas'' strategies - designed to pick up alpha, or excess return, from a variety of sources while benchmarked against a cash return - have hit the institutional market.

The strategies can vary greatly in how they generate alpha, but they typically offer very low correlations to traditional fixed income, varying levels of volatility and enhanced returns. These absolute-return strategies represent a departure from traditional bond management, where managers typically add value by making interest rate bets, enhancing yields through riskier credits and playing the spreads between various fixed-income...

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