Plenisfer Destination Dynamic Income Total Return - The "new active" approach to flexible global bonds
In Short
"...our core strategy emphasizes income, with a focus on rotating sectors to capitalize on the best opportunities, ensuring stable and sustained carry"
by Mauro Ratto
Co-founder, Co-CIO and Lead Portfolio Manager at Plenisfer, part of Generali Investments
Milestone
The 1-YEAR ANNIVERSARY of the new Plenisfer Destination Dynamic Income fund
The 'NEW ACTIVE' approach to flexible global bonds
With the Plenisfer Destination Dynamic Income Total Return fund reaching its one year anniversary in May, Mauro Ratto explains how making a strong call on inflation has led to positive returns.
The Plenisfer Destination Dynamic Income Total Return focuses solely on total return, covering sovereign and corporate bonds from across the global fixed universe.
From the outset, our portfolio has reflected the shift in trends. We identified inflation as a persistent threat, shaping our strategy to maintain relatively short to medium-term duration while seeking opportunities in credit spreads.
We believe global fixed income markets present plentiful opportunities for an unconstrained, multi-strategy approach, offering higher returns with lower volatility, particularly in the context of subdued equity yields.
The ‘new active’ approach1
The Plenisfer Destination Dynamic Income Total Return (the “Dynamic Income fund”) is part of a range of funds that that all share the same multi-strategy approach that defines our investment philosophy. In essence, we believe that investing has fundamentally shifted into a new environment, which calls for an entirely different investment approach to deliver returns. In contrast to the previous twenty years, investors now face higher inflation, tightening liquidity, and a shortage of labour and materials.
That is why we do not allocate by asset class in any of our funds, but through complementary strategies that are entirely unconstrained, allowing us to access opportunities outside of benchmarked products. In the Plenisfer Dynamic Income fund, our core strategy emphasizes income, with a focus on rotating sectors to capitalize on the best opportunities, ensuring stable and sustained carry. Complementing this are special situations, where we select idiosyncratic bond opportunities, including distressed debt and sovereigns, to enhance returns. We also implement a macro strategy, allocating to long and short positions on rates and currencies, and utilizing derivatives for relative bets.
We call this multi-strategy approach ‘the new active’. It aims to optimise the convexity of the portfolio compared to market betas while mitigating volatility, by finding idiosyncratic opportunities with the potential to deliver specific performance outcomes.2 Our unconstrained, goal-based approach aims to avoid the overcrowding and overconcentration of risk that we believe is all too common in the asset management industry.
Outlook: Combining spread and duration exposure
We're monitoring US unemployment numbers, and while we don't foresee a recession, we anticipate slower growth. Therefore, our positioning has been conservative compared to competitors, using TIPS to add duration to the portfolio without generating negative carry.
While economic conditions in Europe and the UK differ, we anticipate a convergence towards previous inflation levels. Consequently, our investment approach capitalizes on opportunities in sovereign and credit spreads.
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1 There is no guarantee that an investment objective will be achieved or that capital will be preserved. The Fund does not benefit from any capital protection guarantee.
2 This Fund is not a guaranteed product. Investments involve risks. You may not recover the initial investment. You may lose part or all of the initial investment. Investment can result in financial loss, as there is no capital guarantee.
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