PGIM Fixed Income 4Q 2020 Outlook
PGIM Fixed Income shares their views on the current economic environment and outlook for fixed income markets.
Prepare for extended low rates
Fixed income investing in a lower-for-longer world
Capitalize on the Credit Opportunity
Volatility has resulted in credit spread widening across securitized credit, investment grade, high yield, and emerging markets. Historically, periods of spread widening have provided attractive opportunities in many of these sectors.
- Expand the opportunity set with a diversified approach
Gain exposure to a variety of global fixed income credit sectors.
Featured solution: PGIM Total Return Bond Fund (PDBZX) - Complement core fixed income with high yield bonds
High yield spreads are trading above their historical tights. This dynamic may provide an opportunity for spreads to tighten, resulting in potential upside appreciation for high yield bonds.
Featured solution: PGIM High Yield Fund (PHYZX)
Did You Know?
The additional flexibility of Core Plus strategies has provided stronger historical returns on an absolute and risk-adjusted basis over the past 10- and 15-year periods.
EXPLORE THE CORE PLUS OPPORTUNITY SET
High-quality, intermediate-term Core and Core Plus bond strategies both provide income and serve as ballast to a portfolio’s equity exposure. However, between the two styles Core Plus has historically offered:
- Broader diversification across sectors and securities
- Stronger long-term returns on both an absolute and risk-adjusted basis
- Consistent outperformance relative to Core strategies
A Heritage of Managing Risk
Consistent, strong, risk-adjusted returns do not happen by accident. They often come from applying a consistent philosophy over a period of years. PGIM Fixed Income’s investment approach and strong focus on risk management can be traced back to 1875, when it started managing the assets in Prudential’s general account.
PGIM Fixed Income is an active global fixed income manager bringing scale, stability, and broad capabilities to the pursuit of consistently strong, risk-adjusted returns.
"The team…is backed by a fixed-income research powerhouse that includes a cadre of more than 100 portfolio managers and 100 analysts. The group also draws on a 50-plus-member team focused on proprietary analytics, risk management, and performance attribution." – Morningstar, Inc., 7/16/2020
A Distinctive Investment Process
PGIM Fixed Income’s investment process gives equal weight to credit research, portfolio management, and risk management to help deliver competitive returns and manage volatility. This unique structure helps to ensure proper checks and balances among the three key pillars of the investment process:
Resources to Help Grow Your Business
At PGIM Investments, we are committed to helping you grow your business. We have a variety of resources to ensure that you are having meaningful conversations with your clients ranging from asset manager outlooks and commentary to product implementation concepts and business-building ideas.
PGIM FIxed Income Podcast Series, All the Credit: Episode 8
Senior Portfolio Manager Michael Collins welcomes Chief European Economist Katharine Neiss, PhD, and Head of European IG Corporate Bonds Edward Farley
1 Source: PGIM Fixed Income. Data as of 6/30/2020.
Investing involves risk. Some investments are riskier than others. The investment return and principal value will fluctuate, and shares, when sold, may be worth more or less than the original cost.
PGIM Total Return Bond Fund—The Fund may invest in high yield (“junk”) bonds (up to 30%), which are subject to greater credit and market risks; foreign securities (up to 30%), which are subject to currency fluctuation and political uncertainty; mortgage-related securities, which are subject to prepayment risks; short sales, which involve costs and the risk of potentially unlimited losses; leveraging techniques, which may magnify losses; and derivative securities, which may carry market, credit, and liquidity risks. The Fund may not be invested in all sectors at a given time. U.S. government and agency securities are subject to market risk, interest rate risk, and credit risk. Not all U.S. government securities are insured or guaranteed by the full faith and credit of the U.S. government.
PGIM Short-Term Corporate Bond Fund—The Fund may invest in high yield (“junk”) bonds, which are subject to greater credit and market risks; mortgage-related securities, which are subject to prepayment risks; short sales, which involve costs and the risks of potentially unlimited losses; leveraging techniques, which may magnify losses; and derivative securities, which may carry market, credit, and liquidity risks.
PGIM High Yield Fund—The Fund may invest in high yield (“junk”) bonds, which are subject to greater credit and market risks; short sales, which involve costs and the risk of potentially unlimited losses; leveraging techniques, which may magnify losses; and derivative securities, which may carry market, credit, and liquidity risks.
PGIM Global Total Return Fund—The Fund may invest in foreign securities, which are subject to currency fluctuation and political uncertainty; high yield (“junk”) bonds (up to 35%), which are subject to greater credit and market risks; asset-backed securities (up to 35%), which are subject to greater credit risk; mortgage-related securities, which are subject to prepayment risks; short sales, which involve costs and the risk of potentially unlimited losses; leveraging techniques, which may magnify losses; derivative securities, which may carry market, credit, and liquidity risks; and certain economic sectors, thereby increasing its vulnerability to a single economic, political, or regulatory development.
Class Z shares may be available to group retirement plans and institutional investors through certain retirement, mutual fund wrap, and asset allocation programs. They may also be available to institutional investors and through fee- or commission-based retail brokerage programs of certain financial intermediaries. Class Z shares are generally closed to new retirement plans. Please see the prospectus for additional information about fees, expenses, and investor eligibility.
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An investment in our money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve the value of your clients investment at $1.00 per share, it is possible to lose money by investing in the funds.
Mutual fund investing involves risk. Some mutual funds have more risk than others. The investment return and principal value will fluctuate, and investors' shares, when sold, may be worth more or less than the original cost. Fixed income investments are subject to interest rate risk, and their value will decline as interest rates rise. Asset allocation and diversification do not assure a profit or protect against loss in declining markets. There is no guarantee a Fund's objectives will be achieved. The risks associated with each fund are explained more fully in each fund's respective prospectus.
This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation about managing or investing your retirement savings. Clients seeking information regarding their particular investment needs should contact a financial professional.
Investment products are distributed by Prudential Investment Management Services LLC, a Prudential Financial company, member SIPC. Separately Managed Accounts are offered through our affiliates. Jennison Associates and PGIM, Inc. (PGIM) are registered investment advisors and Prudential Financial companies. QMA is the primary business name of QMA LLC, a wholly owned subsidiary of PGIM. PGIM Fixed Income and PGIM Real Estate are units of PGIM. © 2020 Prudential Financial, Inc. and its related entities. Jennison Associates, Jennison, PGIM Real Estate, PGIM, and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.
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Investment Products: Are not insured by the FDIC or any other federal government agency, may lose value, and are not a deposit of or guaranteed by any bank or any bank affiliate.
1041620-00001-00 Ed. 10/2020