PGIM Fixed Income explores the potential rewards and risks of expanding a fixed income allocation beyond a domestic-only market. In this paper, they examine how an actively-managed, broad global bond allocation, generally currency hedged, can reduce volatility and improve return efficiency by providing three potential benefits:
• The mitigation of concentrated interest rate risk in the investor's domestic market;
• Diversified exposure to the broadest available set of global credit sectors and issuers; and
• The ability to dynamically capture the most attractive global term premia and credit spreads from country allocation, as well as sector and security selection
Arvind Rajan, PhD, Managing Director, Head of Global and Macro, PGIM Fixed Income; Robert Tipp, CFA, Managing Director, Chief Investment Strategist and Head of Global Bonds, PGIM Fixed Income
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