Brandywine Global – A pioneer in global fixed income investing
A pioneer in global fixed income, Brandywine Global looks beyond conventional short-term thinking to pursue long-term value.
Different Perspectives. Differentiated Results.
Experience, judgment and expertise are paramount in global bond investing, where choices are many but finding the best opportunities can be difficult. Brandywine Global embodies these qualities with a disciplined macro-driven, value-oriented investment approach that goes beyond conventional thinking and traditional bond benchmarks to generate quality results for investors around the globe.
Four Ways Brandywine Global Challenges Conventional Thinking
Thinking Globally with a Macro Perspective
Brandywine Global maintains that a global, macro approach is an essential input in the risk equation.
- A global orientation yields a greater opportunity set and diversification potential, with exposure to multiple business cycles and lower correlations between some countries and across asset classes.
- Top-down macro analysis provides a broad perspective and promotes better understanding of the interdependencies between countries, bond markets and currencies.
Thinking Beyond Benchmarks
Brandywine Global believes that global bond indices are flawed because the largest issuers of debt are allotted the largest benchmark weights, skewing indices toward the biggest issuers, creating misalignment of interests between issuers and investors.
- As market conditions become more challenging amid rising interest rates, a benchmark-agnostic or unconstrained approach may afford the best opportunity for outperformance.
- The flexibility to invest beyond benchmarks may offer better opportunities for real yield, valuation and quality while avoiding or minimizing exposure to unattractive countries or sectors.
Thinking Differently About Risk — and Volatility
Brandywine Global believes equating volatility with risk may limit the performance potential of a fixed income strategy and may even be a hidden source of risk.
- A pragmatic view of risk is necessary for long-term outperformance, which means a willingness to accept some volatility in order to find the best potential real yield opportunities.
- Focusing on uncovering the most attractive combinations of value, quality and strong or improving fundamentals, instead of just volatility, can contribute to strong down-market capture.
Thinking Holistically About What Drives Alpha
Brandywine Global believes that results are driven by multiple sources of potential alpha, including country rotation, duration decisions, credit selection and currency exposure.
- Interest rates and currencies are intrinsically linked, and both are actively considered in portfolio construction.
- Demonstrated skill in active currency management has been a differentiating feature of Brandywine Global’s past results.
In This Series
An actively managed, global fixed income strategy that seeks to maximize total return through strategic investment in countries, currencies and sectors.
The downside capture ratio is a statistical measure of an investment manager's overall performance in down markets. It is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped.
Alpha is a measure of portfolio performance vs. a benchmark, relative to the volatility of that benchmark. An alpha greater than zero suggests that the portfolio has outperformed during the period by means other than adding volatility.
Duration measures the sensitivity of price (the value of principal) of a fixed income investment to a change in interest rates. The higher the duration number, the more sensitive a fixed income investment will be to interest rate changes.
IMPORTANT INFORMATION: All investments involve risk, including loss of principal. Past performance is no guarantee of future results. An investor cannot invest directly in an index. Unmanaged index returns do not reflect any fees, expenses or sales charges.
Equity securities are subject to price fluctuation and possible loss of principal. Fixed-income securities involve interest rate, credit, inflation and reinvestment risks; and possible loss of principal. As interest rates rise, the value of fixed income securities falls. International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.
The opinions and views expressed herein are not intended to be relied upon as a prediction or forecast of actual future events or performance, guarantee of future results, recommendations or advice. Statements made in this material are not intended as buy or sell recommendations of any securities. Forward-looking statements are subject to uncertainties that could cause actual developments and results to differ materially from the expectations expressed. This information has been prepared from sources believed reliable but the accuracy and completeness of the information cannot be guaranteed. Information and opinions expressed by either Legg Mason or its affiliates are current as at the date indicated, are subject to change without notice, and do not take into account the particular investment objectives, financial situation or needs of individual investors.
Diversification does not guarantee a profit or protect against a loss.
Active management does not ensure gains or protect against market declines.
Yields and dividends represent past performance and there is no guarantee they will continue to be paid.
High yield bonds are subject to increased risk of default and greater volatility due to the lower credit quality of the issues.
International investments are subject to special risks including currency fluctuations, social, economic and political uncertainties, which could increase volatility. These risks are magnified in emerging markets.
Asset-backed, mortgage-backed or mortgage related securities are subject to additional risks such as prepayment and extension risks.
U.S. Treasuries are direct debt obligations issued and backed by the "full faith and credit" of the U.S. government. The U.S. government guarantees the principal and interest payments on U.S. Treasuries when the securities are held to maturity. Unlike U.S. Treasury securities, debt securities issued by the federal agencies and instrumentalities and related investments may or may not be backed by the full faith and credit of the U.S. government. Even when the U.S. government guarantees principal and interest payments on securities, this guarantee does not apply to losses resulting from declines in the market value of these securities.