Manager Performance - Overview of Fixed Income LeversView PDF
Unlike other investor types, insurance companies and government risk pools allocate the majority of their assets to investment-grade fixed income. These allocations typically range from 70% to 100% of their portfolios depending on regulatory and other constraints (i.e. net position, business dynamics, etc.).
As most insurers and risk pools outsource management of the fixed income portfolio to a third-party investment manager, it is import the selected manager generate a consistent, superior risk-adjusted return in excess of the applicable benchmark (and better than those of other managers).
Investment grade fixed income managers can utilize a number of levers (or tools) within the portfolios they manage.