Fixed Income Factor Investing

With recent shifts in central bank policies and the ongoing battle against inflation, fixed income investors are navigating a challenging environment. Although interest rates have risen, credit spreads remain unusually tight, reflecting strong demand for yield in a low-risk premium environment. This dynamic has resulted in lower compensation for credit risk and increased sensitivity to potential market shocks. Tighter liquidity further complicate portfolio management, making it difficult for investors to achieve an optimal balance between yield and risks.

In response, asset managers are turning to strategies that provide attractive yields while managing portfolio risks. Factor-based investing, long used in equities, is gaining traction in fixed income. By looking beyond traditional metrics like duration and credit rating, and incorporating factors such as value, quality, and momentum, investors can seek better diversification and improved risk-adjusted returns. However, the practical implementation of such strategies is complex, given the distinctive characteristics of fixed income markets, requiring a sophisticated and nuanced approach.

We are happy to support the SFI Master Classes as a cooperation partner of the Swiss Finance Institute (SFI). They offer experienced banking and finance professionals a unique opportunity to exchange knowledge and share their professional views with high-ranking academics and industry experts in an interactive learning environment. The Master Classes include practical group work and opportunities for discussion.

SFI Master Classes are offered free of charge to employees of companies affiliated with the Swiss Bankers Association (SBA) as well as to employees of FINMA and Swiss National Bank (SNB). The events in Zurich are also open to all employees of member companies of the Zurich Banking Association.

The master classes are acknowledged SAQ recertification measures and comprise four learning hours. Further information on the profiles and the topics covered can be found at sfi.ch/mc.

We look forward to lively participation and a stimulating exchange between industry and academia.

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