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An active approach to credit versus buy and maintain (B&M)
Peter Becker
Investment Director
Flavio Carpenzano
Investment Director
November 21, 2023
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Buy & Maintain (B&M) investing in fixed income is very different from the normal way investors think about constructing their credit/corporate bond portfolios. Its duration and income-driven strategies have tailored duration profiles and steady cash flows designed to match a defined set of cash liabilities over a defined period. This means choosing specific bonds to offer a reliable and transparent series of cash flows rather than managing the bonds relative to indices.


While we acknowledge B&M credit strategies offer advantages to several types of investors (i.e. liability-driven investors, or investors under accounting or solvency constraints), a fully active approach could provide greater potential for returns and risk management.


This paper makes the case for why investors should consider a more active credit approach in the current economic environment.


The below table highlights the key differences between an active approach and a B&M strategy. 


Comparing key characteristics of different investment approaches

Comparing key characteristics of different investment approaches

For illustration purposes only
Source: Capital Group 

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Peter Becker is an investment director at Capital Group. He has 27 years of industry experience and has been with Capital Group for five years. Prior to joining Capital, Peter was a managing director in the fixed income product management team at Wellington Management. Before that, he was a portfolio manager at Aberdeen Asset Management. He holds a master's degree from The Ingolstadt School of Management. He also holds the Chartered Financial Analyst® designation. Peter is based in London.

Flavio Carpenzano is an investment director at Capital Group. He has 18 years of industry experience and has been with Capital Group for two years. He holds a master's degree in finance and economics from Università Bocconi. Flavio is based in London. 

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Fixed Income
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Market Volatility
Bonds

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