After his departure from Marret Asset Management in 2019, Barry Allan launched DMAT Capital Management with a thought in mind that of all the core spheres of investment that exist in the market, fixed income is the one that is facing the most disruption. Investors have a genuine dilemma in terms of what to do with the fixed income portion of their portfolios. In the midst of what looks to be one of the most highly transitory periods in markets, his new firm, DMAT Capital Management, founded in 2019, with a new mission altogether, is sub-advising Horizons Active High Yield Bond ETF (HYI), and Horizons Tactical Absolute Return Bond ETF (HARB).
The traditional 60/40 portfolio mix has had a tremendous 40 year run. As of last year, contrary to most investors' perceptions, bonds as measured by indices, have done as well, or nearly as well, as broad stock market indices during the last 40 years. Equities, however, are largely expected to continue to behave like equities, as the basis of their growth is corporate earnings. Bonds, however, which have also reached new highs during the last year, have done so on the basis of falling yields or interest rates. The problem is at the zero bound, government bonds no longer provide that much loved interest payment offset. So what can investors do to prepare and position the significant fixed income allocation in their portfolios for the period ahead, so that it continues to provide an investment return, some ballast during downturns, and investment income as well?
In this third episode, Barry Allan shares his thoughts on how investors can approach the fixed income dilemma. In case you missed yesterday's first two episodes, The Current State of Fixed Income, here they are.
"What you can’t do, it’s just another argument for not investing passively, because if you invest passively, you can earn that small, single digits, sub 5% returns, but if you want returns higher than that, in my view, you have to invest tactically," says Allan. "I think the world has come, and it’s not just fixed income, it’s equities and everything else, you have long periods or prolonged periods of suppressed volatility, followed by violent moves that last two to three months at most. To me, that argues for a more tactical investment style.
Horizons Active High Yield Bond ETF (HYI), is now sub-advised by DMAT Capital Management Inc. DMAT assumed sub-advisory responsibility of HYI as of November 4, 2020.
Horizons Tactical Absolute Return Bond ETF (HARB) is a new ETF, sub-advised by DMAT Capital Management Inc. It will provide an actively managed fixed income strategy with the flexibility to “go anywhere” for tactical investment opportunities, which could be more important now than ever before.
Barry Allan is the President, CEO and CIO of DMAT and has more than 38 years of industry experience running investment mandates across the full spectrum of the fixed income world, including Government bonds, investment-grade bonds, high-yield bonds and distressed bonds. Prior to founding DMAT, Mr. Allan founded Marret Asset Management in 2001, and built it into a full-service asset management firm, which when he left in 2019, had assets under management of more than $4.4 billion. Mr. Allan has also held senior positions with Altamira Management Ltd., where he managed a wide range of global fixed income mandates, and Nesbitt Burns, where he was a proprietary trader, Director, and head of fixed income derivatives.
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