Please provide your details to access the whitepaper


I acknowledge that I qualify as a professional client or institutional/qualified investor. By submitting these details, I confirm that I would like to access this content and receive thought leadership email updates from Aviva Investors, in addition to any other email subscription I may have with Aviva Investors. You can unsubscribe or tailor your email preferences at any time.

For more information, please read our privacy notice.

Executive summary

Many factors can explain return attribution differences in credit portfolio returns – curve, interest rate positioning, sector allocation and security selection. Solid bottom-up fundamental credit research is certainly a cornerstone of any successful corporate bond management strategy, as most credit managers generally achieve a majority of their excess returns through sector allocation and security selection.

But what if we told you that effective portfolio construction is an inexpensive alpha source that can allow a credit manager the opportunity to build portfolios around their best ideas while also producing consistent and uncorrelated excess returns in both bull and bear markets? This paper explores:

  • Why behavioral biases among credit investors may be a hindrance to their risk management process
  • What makes tracking error a useful, but often misunderstood risk metric in relation to portfolio management
  • How effective portfolio construction can uncover alpha sources that help achieve outperformance in up and down bond markets