Solving the Core Fixed-Income Conundrum - Title Image

Solving the Core Fixed-Income Conundrum

An active, diversified, multi-sector approach to meeting the total return objectives of core fixed-income management without taking on undue risk.

May 18, 2023

Core Conundrum Video

Anne Walsh explains the Guggenheim approach to solving the Core Fixed-Income Conundrum.

In the 2023 edition of The Core Conundrum, Guggenheim’s investment team discusses why investors may find better value in fixed-income sectors that are underrepresented in the Bloomberg U.S. Aggregate Bond Index (the Agg), such as structured credit, below investment-grade corporate credit, floating-rate bonds, and municipal bonds.

Key Takeaways:

  • The Agg remains the preeminent performance benchmark for core fixed-income investors, but it is dominated by low-yielding government securities. Traditional return targets may be difficult to achieve while staying close to the Agg.
  • At $26.8 trillion, the Agg represents less than half of the total U.S. fixedincome universe, leaving out over $28 trillion of non-indexed securities.
  • As an active fixed-income asset manager unconstrained by the benchmark Agg, we can access a broad spectrum of fixed-income sectors best suited to current market conditions. For example, bank loans and short-duration products have performed well in periods of rising rates, and structured credit has provided compelling returns when investment-grade corporate bond spreads were too low to offset the risk side of the equation.
  • We believe actively managed portfolios have the best potential to harvest attractive risk-adjusted returns. This approach demands significantly more credit expertise and ongoing diligence, but we believe it offers the prospect of better risk-adjusted returns over time.
Important Notices and Disclosures

Investing involves risk, including the possible loss of principal. Investments in fixed-income instruments are subject to the possibility that interest rates could rise, causing their values to decline. Investors in asset-backed securities, including collateralized loan obligations (“CLOs”), generally receive payments that are part interest and part return of principal. These payments may vary based on the rate loans are repaid. Some asset-backed securities may have structures that make their reaction to interest rates and other factors difficult to predict, making their prices volatile and they are subject to liquidity and valuation risk. CLOs bear similar risks to investing in loans directly, such as credit, interest rate, counterparty, prepayment, liquidity, and valuation risks. Loans are often below investment grade, may be unrated, and typically offer a fixed or floating interest rate. High yield and unrated debt securities are at a greater risk of default than investment grade bonds and may be less liquid, which may increase volatility.

This material is distributed or presented for informational or educational purposes only and should not be considered a recommendation of any particular security, strategy or investment product, or as investing advice of any kind. This material is not provided in a fiduciary capacity, may not be relied upon for or in connection with the making of investment decisions, and does not constitute a solicitation of an offer to buy or sell securities. The content contained herein is not intended to be and should not be construed as legal or tax advice and/or a legal opinion. Always consult a financial, tax and/or legal professional regarding your specific situation.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information.

© 2023 Guggenheim Partners, LLC. All rights reserved. Guggenheim, Guggenheim Partners and Innovative Solutions. Enduring Values. are registered trademarks of Guggenheim Capital, LLC.

Guggenheim Funds Distributors, LLC an affiliate of Guggenheim Partners, LLC. For more information, visit or call 800.345.7999.



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