Principal Global Fixed Income

Principal Global Fixed Income

Joseph Byrum, Chief Data Scientist
Principal Global Fixed Income
Des Moines, IA
Industry: Asset Management

Business Challenge

As interest rates have decreased, fixed income investors seek out opportunities that provide improved returns, with a better risk profile, at a lower cost. In recent years, investors have gravitated towards passive index management due to growing dissatisfaction with the results of traditional active fixed income strategies. All forms of passive index management focus on delivering portfolio results that closely match those of the reference index.

Analytics Solution

Analytics has completely transformed our internal fundamental and quantitative investment methodologies that have resulted in products with both unique investment characteristics and performance. A new generation of analytics was deployed to understand that no risk premia delivers in all markets. We have developed analytical techniques that exploit market inefficiencies and deliver long-term outperformance. And because no single risk premium dominates across time, we also take into consideration that risk premia perform differently across segments of global fixed income markets. Further, our methodologies take into account that regional differences drive behavioral biases and investor activity. Accordingly, collective analysis of the regional financial markets, monetary policy and taxation help explain regional differences in risk premia. Moreover, we have developed methodologies that in turn select the best bonds in order to gain exposure to each risk premia. Consequently, we systematically map risk premia exposures to individual bonds with proprietary algorithms.

Impact

Our key competitive distinction is our proprietary unique and differentiated signals that are integrated with subject matter expertise on a truly global scale. It extends beyond the fundamental and quantitative investment expertise. It reflects the seamless alignment of cutting-edge analytical techniques, data, and subject matter expertise into a research engine into a complementary research engine applied across fixed income markets and sectors worldwide, among companies large and small. Clients benefit from our integration.