Active Fixed-Income

The best of both worlds – targeting attractive returns while preserving capital

Mitigating risk - at the heart of the investment process

With a market environment in constant evolution, fixed income investors benefit from deep credit knowledge and the ability to quickly assess opportunities across the yield curve. The BMO Active Fixed Income Team incorporates this approach seeking to deliver attractive returns by combining their proven multi-factor (Yield curve, Credit spread, Carry + Rolldown) analysis and decades of experience across fixed income markets.

 

Protecting our client’s capital remains at the centre of their investment process with rigorous risk oversight, including for environmental, social & governance (ESG) issues. The Team recognizes the different realities and challenges facing institutional investors and thus offers customized solutions to properly address those.

Benefits

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True active management via a proven rigorous process.

Comprehensive risk assessment using proprietary tools, continuous monitoring and independent analysis.

Flexibility to build solutions tailored to each institutional investor’s needs.

Investment Philosophy

Capital markets provide investment opportunities that can be identified through forecasting and analysis.
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The global economy influences domestic markets making macro-economic insights important drivers for fixed income returns.
Target
Defined factor targets can be used to construct optimal risk/return portfolios.
ESG considerations are integrated into our investment philosophy of relevant mandates.

Investment process

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Analysis/Forecasting:

Expectations about the future direction of interest rates, shape of the yield curve and credit spreads are determined to identify investment opportunities.

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Portfolio Construction/Optimization:

The Team’s proprietary optimization model is used to examine the opportunity set and its output is used to help determine factor targets.

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Implementation and Risk Management:

The Team’s proprietary Fixed Income Monitor aims to identify and quantify risk factors present in a portfolio.

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Continuous Risk Monitoring:

The Team manages all risk factors daily to ensure that portfolios remain in line with the intended risk exposures.

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Performance Attribution:

Attribution is conducted to determine not only a strategy’s viability, but to also isolate and quantify the factors that contributed to its success.

Bringing ESG into our valuation model

While ESG issues are generally associated with equity investments, they also impact corporate credit by potentially undermining a company’s ability to meet its financial obligations. As a result, we take several steps to reduce ESG risks into some of our active fixed income portfolios.
The Active Fixed Income and Responsible Investment teams collaborate to assess ESG risks for individual issuers.
ESG factors are integrated into the Team’s detailed credit analysis, and companies are evaluated on how their ESG record impacts their credit profile.
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The teams meet with companies to discuss how to better manage ESG issues.

Contact us

Please contact us at [email protected] to learn more.

Disclosures

Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus.
Commissions, trailing commissions (if applicable), management fees and expenses all may be associated with mutual fund investments. Please read the fund facts or prospectus of the relevant mutual fund before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Distributions are not guaranteed and are subject to change and/or elimination.
For a summary of the risks of an investment in BMO Mutual Funds, please see the specific risks set out in the prospectus.
BMO Mutual Funds are managed by BMO Investments Inc., which is an investment fund manager and a separate legal entity from Bank of Montreal.
BMO Global Asset Management is a brand name under which BMO Asset Management Inc. and BMO Investments Inc. operate. Certain of the products and services offered under the brand name, BMO Global Asset Management, are designed specifically for various categories of investors in Canada and may not be available to all investors. Products and services are only offered to investors in Canada in accordance with applicable laws and regulatory requirements.
®/™Registered trademarks/trademark of Bank of Montreal, used under licence.

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