GSFM’s Investment Strategist Stephen Miller moderates a discussion with Eric Souders, Lead Portfolio Manager responsible for the Payden & Rygel Absolute Return Bond Fund, and Josip Zdrilic, Head of Credit Structure & Research within the Securitized team at Payden & Rygel.

The conversation explores the recent shifts in the fixed income market, brought about by significant events such as the global COVID-19 pandemic, supply disruptions stemming from the Russia-Ukraine conflict, and the unexpected persistence of inflation leading to a substantial rise in bond yields. Eric highlights the opportunities emerging from higher yields, especially in higher-quality bonds, making cash, government bonds, and investment-grade corporate bonds attractive choices. Josip sheds light on the complexities of securitized fixed income, emphasizing its versatility in coupon styles, duration profiles, and capital structures. The discussion also explores the recurring concern of a potential recession and strategies for managing liquidity and risk in an absolute return portfolio. Ultimately, the conversation challenges traditional notions about the role of bonds in portfolio construction, suggesting they still offer compelling opportunities amid changing market dynamics.

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