“In our last quarterly publication, we highlighted the limited potential for short-term beta returns from fixed income, and we emphasised the significant alpha opportunities that we anticipated. The events of the past quarter could not have validated that prediction more accurately,” Jackson explains in Vontobel’s quarterly fixed income report for the month of June.
Despite the volatile market conditions from the US-led tariffs, geopolitical tensions, stretched valuations and a “gradual rebalancing of global financing and military power”, Andrew Jackson, head of fixed income at Vontobel, believes that at these levels, alpha is “worth far more” than beta.
Alpha refers to the excess return on an investment after taking into account market-related volatility and random fluctuations while beta measures the volatility relative to a benchmark such as the S&P500.
