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March 2018 | Brian Garvey & Brij Khurana

Opportunistic Fixed Income: Opportunity from volatility

Recent bouts of market volatility have reinforced our long-held belief that fixed income investors do not need to settle for the meagre returns offered
by traditional core bonds.

In contrast to core bond returns of typically 2% – 3% gross in US$, our
Opportunistic Fixed Income (OFI) approach targets total returns of 5% –
7% a year (gross, in US$, over the course of a business cycle, which is
typically 3 – 5 years). What is more, it aims to achieve this while maintaining
the volatility profile of a core fixed income allocation ¹

1We define core fixed income volatility as being similar to that of the Bloomberg Barclays Global Aggregate Bond Index hedged to USD. During times of market stress, target volatility may be different from the stated aspiration. This is a US dollar-based approach; investment in other currencies may experience different returns because of hedging and interest rate differentials.

Past performance is no guarantee of future performance and can be misleading. Funds returns are shown net of fees. Source: Wellington Management

© 2018 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. The Overall Morningstar Rating for a fund is derived from a weighted average of the three, five, and ten year (if applicable) ratings, based on risk-adjusted return. Past performance is no guarantee of future results.

Investment in the funds described on this website carries a substantial degree of risk and places an investor’s capital at risk. The price and value of investments is not guaranteed and can go down as well as up. An investor may not get back the original amount invested and an investor may lose all of their investment. Investment in the funds described on this website is not suitable for all investors. If an investor is in any doubt as to the suitability of an investment in a fund, an investor should consult an independent financial advisor. The information on this website does not constitute, and should not be construed as, investment advice or a recommendation to buy, sell or otherwise transact in any security including, but not limited to, shares in the funds. An investor should only invest in a fund once that investor has carefully read and understood the prospectus and KIID for the fund which contain further information on the risks and features of the fund. Unless stated otherwise data is as at previous month end.

This material and/or its contents are current at the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Wellington Management. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice.

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