The idea behind this multi-sector credit strategy came up about two-and-a-half years ago. When we looked at the overall landscape of fixed-income markets, it was clear that it was going to be difficult to garner income from plain vanilla, gilt-edged, Barclays Aggregate type portfolios. It would be necessary for investors—insurance companies, pension plans, even individuals—to focus carefully and strategically on where the markets offered the best possible returns. In the credit space, we weren't aware a single product out there could do that.
This strategy is the only one we know of that combines four major credit asset classes: investment grade, high-yield, bank loans and emerging market debt—both sovereign and corporate. The rationale was to capture credit beta tactically and combine that with one of the Invesco Fixed Income (IFI) platform's competitive advantages – the ability to select securities. So through tactical asset allocation, we can be in the right asset class and have the right beta in the portfolio, allowing us the opportunity to provide current income with capital appreciation. Over time, this can potentially provide a lower risk profile than high-yield and a higher return than traditional investment-grade credit instruments.