Shifting the Credit Frontier

SHIFTING THE CREDIT FRONTIER

Building more resilient income portfolios in a changing market

WHY CREDIT NEEDS TO CHANGE

Legacy fixed income allocations held by many investors largely mirror benchmark composition and duration exposure. Inaction under these circumstances leaves portfolios vulnerable to interest rate shocks and insufficiently diversified against shifting correlations.

Today’s evolving environment requires income portfolios to employ a more varied mix of credit exposures. That means investors need to consider diversification among income sources to be just as important as the level of income their portfolios generate.

A rise in cross-asset correlation is constraining portfolio diversification

Russia Invasion of Ukraine
Global Monetary Tightening Cycle

Past performance is not a guarantee or a reliable indicator of future results. Sources: PGIM, Bloomberg, JP Morgan, S&P. Monthly data as of March 2026.

PORTFOLIO BUILDING BLOCKS

A more resilient approach to income brings together credit strategies with different roles within the portfolio, helping reduce reliance on a single market outcome.

Credit Opportunities

ALPHA GENERATOR

Captures dislocation and dispersion across credit markets through bottom‑up security selection, with limited reliance on duration.

Global AAA CLOs

DEFENSIVE INCOME ANCHOR

Provides attractive floating‑rate income from the most senior position in the CLO capital stack, supported by strong structural protection.

Emerging Market Total Return

OPPORTUNITY SET EXPANDER

Dynamically allocates across EM debt, rates and currencies to capture diversified carry while actively managing downside risk.

Multi-Sector Credit

FLEXIBLE CORE ALLOCATION

An alternative way to access multiple sources of credit return within a single allocation.

Whether accessed through specialised strategies or a single multi sector approach, diversifying sources of credit return can help improve income durability and portfolio resilience.

Related Funds

PGIM Global AAA CLO Fund arrow_forward

PGIM Emerging Market Total Return Fund arrow_forward

PGIM Multi-Sector Credit Fund arrow_forward

IMPLICATIONS FOR INCOME PORTFOLIOS

Blending differentiated credit strategies can help portfolios:

Generate more stable income across market regimes
Reduce dependence on interest‑rate movements for returns
Improve diversification across underlying risk drivers
Enhance resilience during periods of heightened volatility

This approach supports a move away from static, benchmark‑led credit allocations toward a more outcome‑oriented use of credit within wealth portfolios.