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PGIM Fixed Income's U.S. TIPS Strategy seeks to outperform, the Barclays U.S. TIPS Index (or similar) over a full market cycle. The Strategy uses a comprehensive risk budget that attempts to addresses each significant risk dimension. The risk framework is the basis for ongoing risk discussion and portfolio construction and was jointly developed by the investment strategy, portfolio management, and risk management teams.1,2
The U.S. TIPS Strategy is grounded by the philosophy that research-driven security selection is the most consistent strategy for adding value. As the liquid bond markets can be relatively inefficient, we seek to capture relative value opportunities by identifying and exploiting undervalued, mispriced securities and implementing disciplined trade execution.
The U.S. TIPS Strategy is based on a quantitatively-driven enhanced index approach that exploits relative value anomalies while limiting risk exposures. We capture trading inefficiencies using proprietary analytics, with modest duration and yield curve exposures. Daily monitoring and management of risks is a pillar of the U.S. TIPS Strategy.
1 There is no guarantee that these objectives will be met.
2 On average, over a full market cycle defined as three to five years.
No risk management technique can guarantee the mitigation of elimination of risk in any market environment.
Source: PGIM Fixed Income as of December 31, 2020.