Fixed Income Strategies
Fixed Income Strategies
High Yield Strategy
Explore this strategy through a dedicated Separately Managed Accounts (SMA) tailored to your objectives.
Discuss an SMA Strategy
Designed to deliver consistent outperformance with a benchmark-aware, no-surprises risk profile
Focused on income generation through fundamental credit and relative value analysis
Position sizing based on bottom up risk-adjusted conviction, not macro predictions
Objective
The Payden High Yield Strategy seeks to generate attractive total returns through income and capital appreciation. The strategy is designed to add value relative to the benchmark across credit cycles through fundamental credit research, relative value analysis, and disciplined portfolio construction.
With a modest tracking error and a focus on delivering a strong information ratio over time, the strategy aims to provide consistent results and a no-surprises risk profile, with performance driven by security selection rather than sector or duration allocation. It is utilized by institutional asset allocators seeking stable high-yield exposure with a strong emphasis on outperformance across market environments.
Where Philosophy Meets Practice
We believe long-term high yield performance is driven by yield and security selection—not market timing. That’s why our strategy is grounded in fundamental credit analysis and relative value, not macro forecasts that can be difficult to time.
We size positions based on issue-level conviction, liquidity, and contribution to overall portfolio risk exposures. The strategy avoids concentrated risk and aims to generate more yield than the benchmark over time. Our size is a structural advantage. We can trade efficiently, adjust exposures as our views evolve, and remain nimble when credit markets shift. Combined with daily oversight and scenario-based risk testing, the result is a strategy that offers consistency, transparency, and value-add without surprises.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Actively managed multi-sector strategies focused on total return and capital preservation
Broad exposure across high-quality, investment-grade credit and government securities as well as the use of out of benchmark asset classes
Active but controlled risk taking, combining top-down and bottom-up decisions for customized risk profiles
Objective
The Payden Core Bond Strategies are built to serve as a foundational, multi-sector fixed income allocation. The strategies are designed to deliver long-term total return above an aggregate benchmark through active management of interest rate and credit risk. By drawing from a broad range of sectors and maintaining flexibility across the yield curve, the strategy seeks to outperform traditional benchmarks.
These strategies are designed for institutional investors seeking more than just index exposure. They are solutions designed to meet evolving market conditions, aiming to add value through active decision-making across governments, corporates, securitized credit and opportunistic sectors.
The strategies can be tailored to accommodate varying risk tolerances and return objectives, meeting investors’ specific goals.
Where Philosophy Meets Practice
We believe the investment universe should be broad enough to capture opportunities and not simply follow an index. We take an active, risk-aware approach that aims to generate incremental return over the benchmark.
Our process combines macroeconomic insights with bottom-up sector expertise. We begin with a firmwide perspective on macroeconomic scenarios and potential outcomes to help formulate top-down views. Our views on rates, credit cycles, and policy inform how we position duration, curve exposure, sector weightings and credit quality across portfolios. Top-down views are integrated with the bottom-up security selection process. Insights from sector teams inform security selection by identifying fundamental and relative value opportunities across government-related, agency mortgage, corporate, and securitized credit. In addition, opportunistic exposures, such as high-yield or emerging markets, are included when appropriate and consistent with client guidelines.
Risk management is embedded in the process. It informs position sizing, liquidity planning, and performance evaluation. The result is a flexible and measured approach that adapts to changing markets while staying grounded in its core goal – a customized portfolio aligned to meet specific client objectives.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Actively managed short-term strategies focused on capital preservation and liquidity
Broad sector exposure with an emphasis on high-quality, investment-grade securities
Custom-built portfolios designed to meet specific cash flow, duration, and return needs
Objective
The Payden Enhanced Cash and Low Duration strategies are designed for investors who seek higher yields than those provided by money market funds but can withstand varying amounts of incremental price volatility. The strategy seeks to optimize short-maturity fixed income portfolios by targeting higher risk-adjusted returns than traditional cash equivalents, while maintaining a strong focus on capital preservation and liquidity.
Customized to meet the unique investment objectives of each client, the firm's short-term bond strategies offer a high-quality, short-term fixed income allocation, with the flexibility to adapt to shifting interest rate environments, credit conditions, and institutional liquidity needs. The strategy invests across governments, corporates, cash equivalents, and securitized credit.
Where Philosophy Meets Practice
We approach short-duration investing with the view that liquidity and performance objectives do not need to be mutually exclusive. We take an active, risk-aware approach that aims to generate incremental return over cash alternatives by combining macroeconomic insight, sector-level research, and precise portfolio construction.
The investment process begins with a firmwide evaluation of macroeconomic scenarios and potential outcomes. The strategy then integrates the top-down forward-looking views on rates, credit conditions, and macroeconomic trends with bottom-up security selection across high-quality sectors, including corporates, asset-backed and mortgage-backed structured products, and Treasuries. Duration, spread duration, and weighted average life are calibrated to client-specific targets.
Two asset classes specifically targeted by the strategy are structured products and investment-grade corporates. Structured products are used not only for spread enhancement but also as diversifiers relative to traditional corporate bonds. The choice between fixed-rate coupon or floating-rate coupon of either asset class depends on the firms current macro view and relative valuations. Holdings are evaluated for liquidity, credit quality, and their role in the broader portfolio. Risk is managed with defined portfolio guidelines, tolerance bands, and oversight. The result is a portfolio that remains responsive to changing markets while staying grounded in our clients' needs.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Access to sovereign, corporate, and local currency EM debt across approximately 90 countries
Active country, credit, and currency selection based on macro and fundamental insights
Strategies tailored to risk tolerance, duration, and client objectives
Objective
Payden’s Emerging Markets Debt strategies are designed to provide long-term income and capital appreciation by investing across sovereign, corporate, and local currency debt markets in emerging economies. With a globally diversified opportunity set spanning approximately 90 countries, the strategies combine macroeconomic analysis with fundamental credit and country research to identify value and manage risk.
Each strategy, whether focused on hard currency sovereigns, corporates, local markets, or a blend, aims to deliver strong absolute and risk-adjusted returns, supported by a rigorous investment process, thorough risk management and disciplined diversification. Customization for duration, credit quality, and ESG considerations allows alignment with a wide range of investor objectives.
Where Philosophy Meets Practice
At Payden, we believe emerging markets offer compelling and underutilized sources of return in global fixed income. But capturing that potential requires more than passive exposure. It requires deep research, real-world insight, and disciplined risk control across countries, currencies, and credits.
Investing in EM countries requires a nuanced and distinct approach relative to other markets. We begin by developing a holistic understanding of each country in order to evaluate its overall trajectory and projected fundamental outlook.
Our approach starts with macro-level views on global growth, inflation, and capital flows. These provide a framework for regional and country-level perspectives through direct research, including on-the-ground engagement in Latin America, Asia, Europe, Africa, and the Middle East. For sovereigns, we evaluate economic policy, political dynamics and institutional credibility. For corporates, we assess credit metrics, governance, and the sector outlook within each country.
With a history in emerging markets investing dating back to the 1990s, our team brings experience and a consistent approach to portfolio management. We construct strategies designed to serve as standalone allocations or complement broader fixed income exposure, with a focus on income potential, diversification, and disciplined risk management.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Actively managed global strategy focused on total return and capital preservation
Diversified exposure across global rates, credit and currency markets
Active but controlled risk-taking, combining top-down and bottom-up decisions
Objective
The Global Fixed Income Strategy is designed for investors seeking actively managed global fixed-income strategies that provide broad access to the world's developed and emerging bond markets, both investment grade and high yield. The strategy seeks to deliver long-term total return above a global aggregate benchmark, providing global diversification through an actively managed portfolio of primarily investment-grade bonds. Portfolios invest across sovereign, corporate, and securitized debt from both developed and emerging markets, with flexibility to allocate across currencies, sectors, and regions.
The strategy provides a high-quality, globally diversified fixed income solution for investors, emphasizing resilience across varying market environments. The strategy can be tailored to accommodate differing currency hedging preferences, offering mandates with fully hedged, partially hedged, or unhedged currency exposures to meet investors’ specific objectives.
Where Philosophy Meets Practice
We adhere to an "active but controlled" approach when managing global fixed income bond portfolios. We believe that opportunities are available through strategic and tactical sector rotation and well-researched issue selection, coupled with duration, yield curve and currency management across local and emerging markets. This opportunity utilization is paired with a thoughtful risk-managed framework to provide optimal risk-adjusted returns.
Our investment process is highly collaborative, combining a firmwide view of top-down macroeconomic factors, with bottom-up security selection. We begin with a firmwide perspective on macroeconomic scenarios and potential outcomes, providing a thematic anchor across portfolios. Active risk is then allocated dynamically across credit, duration, and currencies based on disciplined assessments of risk-adjusted return opportunities and their associated correlations. Individual securities are selected through close partnership with our research analysts and traders, combining fundamental, relative value, technical, and liquidity insights.
Diversification, conviction-led positioning and discipline are key aspects of our portfolio construction process. We apply real-time risk management to ensure portfolios remain aligned with our conviction and client objectives.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Actively managed U.S. mortgage bond portfolios primarily invested in GNMA securities backed by the 'full faith and credit' of the U.S. government
Prioritizes liquidity, diversification, and high credit quality
Built around a rigorous investment process that aims to mitigate prepayment risk
Objective
The Payden GNMA Strategy seeks to deliver stable income and capital preservation through a diversified portfolio of U.S. government-guaranteed mortgage-backed securities. The strategy emphasizes bonds backed by Ginnie Mae (GNMA), offering investors explicit government credit support and an attractive yield relative to other high-quality fixed income assets. The fund targets securities with favorable prepayment profiles and structural characteristics, with a focus on long-term value across market cycles.
Where Philosophy Meets Practice
The GNMA Strategy is managed with the belief that mortgage-backed securities, even when government-guaranteed, require deep analysis and active oversight. At Payden, our process begins with top-down macro views—rates, housing trends, volatility—and combines them with granular, loan-level analysis of mortgage pools.
We evaluate securities for structure, prepayment behavior, seasoning, loan characteristics, and geographic dispersion. Specified pools are typically prioritized for their ability to mitigate prepayment and extension risk, and scenario testing is applied to ensure resilience under a range of interest rate environments.
Risk is managed across multiple dimensions: duration, convexity, liquidity, and pool quality. The portfolio seeks to optimize income and stability, with tactical allocations to adjustable-rate, seasoned, and non-generic pools based on real-time market dynamics.
This data-driven approach enables the portfolio to fulfill its role as a high-quality, income-generating anchor in institutional fixed income allocations.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Designed to deliver consistent outperformance with a benchmark-aware, no-surprises risk profile
Focused on income generation through fundamental credit and relative value analysis
Position sizing based on bottom up risk-adjusted conviction, not macro predictions
Objective
The Payden High Yield Strategy seeks to generate attractive total returns through income and capital appreciation. The strategy is designed to add value relative to the benchmark across credit cycles through fundamental credit research, relative value analysis, and disciplined portfolio construction.
With a modest tracking error and a focus on delivering a strong information ratio over time, the strategy aims to provide consistent results and a no-surprises risk profile, with performance driven by security selection rather than sector or duration allocation. It is utilized by institutional asset allocators seeking stable high-yield exposure with a strong emphasis on outperformance across market environments.
Where Philosophy Meets Practice
We believe long-term high yield performance is driven by yield and security selection—not market timing. That’s why our strategy is grounded in fundamental credit analysis and relative value, not macro forecasts that can be difficult to time.
We size positions based on issue-level conviction, liquidity, and contribution to overall portfolio risk exposures. The strategy avoids concentrated risk and aims to generate more yield than the benchmark over time. Our size is a structural advantage. We can trade efficiently, adjust exposures as our views evolve, and remain nimble when credit markets shift. Combined with daily oversight and scenario-based risk testing, the result is a strategy that offers consistency, transparency, and value-add without surprises.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Actively managed portfolios focused on investing primarily in investment-grade corporate bonds
Designed to enhance yield and total return potential while maintaining high credit quality
Security selection and sector allocation driven by fundamental research and top-down macro views
Objective
Payden’s Investment Grade Corporate Strategy is designed for investors seeking enhanced income and total return potential through a dedicated corporate bond allocation. The strategy focuses primarily on investing in U.S. dollar-denominated, investment-grade issuers and draws on both top-down macroeconomic views and bottom-up fundamental credit research. It also has the flexibility to invest in other asset classes, including high-yield bonds, emerging market debt, municipal bonds, and securitized products, which are used for diversification purposes and to increase total return potential.
Portfolios are actively managed with a disciplined approach to issuer selection, sector allocation, and duration positioning, all while maintaining a strong emphasis on liquidity and risk control.
Where Philosophy Meets Practice
Corporate bond markets offer a deep and dynamic opportunity set, but unlocking value requires a deep understanding of the underlying credit market from both a fundamental and technical perspective. At Payden, our approach begins with a forward-looking view on rates, credit conditions, and macroeconomic trends. From there, sector specialists apply rigorous credit analysis to evaluate relative value, capital structure positioning, and issuer fundamentals.
The strategy is built around investment grade corporate credit, emphasizing diversification across industries, issuers, and maturities. Portfolios are constructed with the goal of producing attractive risk-adjusted returns relative to their benchmark over a market cycle, while managing downside risk through careful sizing, ongoing monitoring, and scenario analysis.
We intentionally structure portfolios. Credit selection and issuer weightings, sector allocation, and yield curve positioning are all tailored to client guidelines and market conditions.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Designed to align portfolio duration with long-term institutional liabilities
High-quality, long-duration bond exposure with active sector and curve positioning
Custom solutions using cash bonds, derivatives, and risk-aware tracking
Objective
The Liability-Driven Investing Strategy is designed to help institutional investors meet long-term obligations by aligning asset portfolios with liability cash flows and duration profiles. Whether the objective is surplus management, liability immunization, or long-duration total return, the strategy offers flexibility across public and private plan structures.
The strategy emphasizes high credit quality and long-dated securities, with the ability to incorporate futures, swaps, and modest high-yield allocations to enhance duration control and income potential. Whether benchmarked to a standard index or a plan-specific liability stream, the strategy is precision-driven, risk-aware, and tailored to institutional objectives.
Where Philosophy Meets Practice
Liability-Driven Investing isn’t just about extending maturities—it’s about precision. At Payden, we approach LDI mandates with a singular focus: aligning portfolio characteristics with future obligations in both time and risk structure.
Our process begins with a deep understanding of each client’s liability profile, whether that’s a pension fund’s actuarial curve or an insurance portfolio’s regulatory capital charge. From there, we construct portfolios using high-quality long-duration assets—Treasuries, agency debt, investment-grade corporates, and mortgages—selected for their ability to match cash flows and maintain liquidity.
We actively manage duration and curve exposure, using interest rate swaps and Treasury futures when necessary to fine-tune alignment with long-dated liabilities. While the foundation remains investment-grade, we may introduce a modest allocation to high-yield to improve income potential and broaden diversification—but only when it fits the overall liability-matching framework.
Risk is calibrated across all dimensions: credit, curve, liquidity, and performance tracking. Oversight is continuous, and portfolios are built to stay in sync with client objectives, whether benchmarked to a broad index or a bespoke liability stream. The result is a durable, high-conviction strategy for institutions managing the long view.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Actively managed municipal bond portfolios focused on generating after-tax total return
Primarily focused on tax-exempt municipal bonds with the flexibility to invest in taxable bonds to balance after-tax income and price performance and liquidity
Disciplined credit approach focused on high quality issuers and diversification designed to limit risk
Objective
The Municipal Bond Strategy focuses on optimizing after-tax portfolio outcomes for tax-aware investors. The strategy does this by leveraging Payden's institutional background and resources and its extensive experience managing municipal bonds and actively managing exposures to interest rates, yield curve, and credit sectors.
Portfolios utilize a multisector approach that periodically incorporates high-quality taxable bonds (taxable municipal and U.S. Treasuries), which enhances our ability to manage downside risk, reduce volatility, and preserve liquidity.
The strategy can be tailored to accommodate varying levels of risk tolerance, marginal tax rates, and tax domicile.
Where Philosophy Meets Practice
Payden's core philosophy for managing municipal bond strategies rests on three key beliefs: tax-exempt is not always optimal, municipal markets are inherently inefficient, and alpha can be consistently earned through active management.
Our investment process begins with a firmwide perspective on potential macroeconomic scenarios and the subsequent impacts on interest rates, credit fundamentals, and policy decisions. An assessment of these outcomes then informs portfolio decisions around the appropriate levels of interest rate and credit exposure. Those views are then combined with a bottom-up credit process that drives security selection through fundamental credit research, relative value analysis, and an assessment of structural components such as coupon and call options that contribute to the expected performance of each security.
Incremental portfolio decisions are rooted in pragmatic assessment of relative value and risk management and incorporate incremental tax implications. Disciplined risk sizing, liquidity screens, and the active management of capital gains/losses round out the approach to help deliver risk-adjusted performance without compromising credit quality, transparency, or tax efficiency.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
Actively managed portfolios addressing the full ratings spectrum within securitized bonds
Broad Exposure across RMBS, CMBS, ABS, and CLOs, targeting deals with strong credit fundamentals
Bottom-up and top-down investment process built for diversification, yield, and risk-adjusted returns
Objective
Payden’s Securitized Income Strategy seeks to capitalize on inefficiencies within the $14 trillion U.S. securitized bond market by constructing portfolios of primarily investment-grade securities with strong collateral structures and credit fundamentals, tailored to meet client return objectives. The strategy targets attractive income and risk-adjusted returns by allocating across a broad opportunity set, including residential and commercial mortgage-backed securities, asset-backed securities, and collateralized loan obligations.
With low correlation benefits to traditional fixed income and naturally diversifying credit exposure, the strategy is well-positioned to complement core bond allocations or stand alone as a differentiated fixed income solution.
Where Philosophy Meets Practice
Securitized investing requires depth of knowledge, discipline, and precision. At Payden, we approach the securitized bond landscape through both a macroeconomic and bottom-up, security-level lens. A firmwide perspective informs macroeconomic scenarios and potential outcomes to formulate top-down views, while the dedicated securitized team evaluates the fundamental and technical implications of these macro themes across RMBS, CMBS, ABS, and CLO sectors.
Our investment process is layered and rigorous. We combine bottom-up analysis of counterparties, collateral and structure with top-down assessment of bond technicals, including spread dynamics, relative value, and liquidity conditions. Securities are evaluated using our credit-structure-price framework, and portfolios are constructed using a “home base” approach that balances duration, credit quality, and spread contribution within client parameters.
Position sizing is deliberate and varies by tranche rating and collateral type, while risk management incorporates both spread duration targets and diversification limits at the sector and issuer level. Portfolios seek to adapt to evolving credit, rate, and liquidity environments, with the goal of delivering consistent income and capital preservation across market cycles.
Investment in foreign securities entails certain risks from investing in domestic securities, including changes in exchange rates, political changes, differences in reporting standards, and, for emerging market securities, higher volatility. Investing in high-yield securities entails certain risks from investing in investment grade securities, including higher volatility, greater credit risk, and the issues’ more speculative nature. The value of fixed income portfolios will rise and fall due to changes in interest rates and other economic factors. Investment portfolios could lose principal.
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