Defensive fixed income must work harder and use a more flexible approach, Henrietta Pacquement, lead portfolio manager at ECM asset management, said at a briefing in London today.

In a rising rate environment, with global markets’ growth prospects looking up, but likely to remain volatile, Pacquement explained how clients can improve the risk/return profile of their fixed income portfolio.

ECM asset management uses Multi Asset Credit (MAC) strategies to hedge interest rate risk. Through this hedging, unlike traditional bond allocations, a multi asset credit mandate is largely insulated from potential future rises in interest rates, the group explained.

Pacquement outlined how to apply MAC techniques to shorter duration credits via yield enhancement, small bond allocation and flexibility in currency investments.