Fixed Income Debate Live!

Did plan sponsors benefit from adding bond strategies in 2009?

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Equity markets staged a major comeback in 2009 following dismal performance in 2008. But what of bonds? Certain approaches to fixed income management paid off during the bounce back. Did investors benefit from including bonds or bond strategies in their portfolios in 2009?

“Fixed income investments have traditionally been held as a source of stability and income for a diversified portfolio,” writes Barbara Miazga, treasurer and director of the University of Ottawa’s pension fund. Miazga is the moderator for the fixed income online debate that started June 3rd, sponsored by Franklin Templeton Institutional, Pyramis Global Advisors and TD Asset Management.

Taking the pro side, stating that bond strategies did provide allow investors’ portfolio’s to benefit during the recent global crisis is David Bezic, Assistant Portfolio Manager, Investment Strategy and Economics with Ontario Teachers’ Pension Plan. Bezic states in his opening statement that “when one expands their window of hindsight to include the turmoil of 2008, the value of fixed income, both in terms of its inherent stability and its role as a diversifier in a portfolio, becomes clear. This observation is especially important for plan sponsors and other investors with an investment horizon stretching beyond just a single year.”

Michael Hyman, former academic and current author of New Ways for Managing Global Financial Risks – The Next Generation has 20 years of previous experience in the global fixed income industry. Hyman says that while bond strategies may have provided some benefit, they ultimately need to be re-evaluated.

“The world is a very different place today and requires a different approach to investing ones money,” stated Hyman in his opening statement. “We live in a world which requires each and every one of us to manage our assets to ensure that they meet our future cash flow liabilities. We have to get back to basics; it’s all about real interest rates.”

The first guest analysis will be posted on June 15th by Gene Morrison, Vice-president and Fixed Income Investment Director with Pyramis Global Advisors. Participants will post their rebuttals on June 23rd.

Do you want to read more from the debate participants and follow the fixed income online discussion? Visit www.cirdebates.com. If you are a plan sponsor and do not yet have a username and password, contact CIR Online Debates editor, Jennifer Hughey.

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