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Strategy Overview

The Global Unconstrained Fixed Income strategy seeks to generate positive absolute returns from global fixed income investments—regardless of market conditions—by employing long or short exposures in countries, currencies, sectors, and individual securities. This value-based strategy maintains a primary focus on global sovereign debt investments with a goal of unlocking the potential benefits of mean-reversion tendencies in interest rates and currency valuations. For over two decades, the Global Fixed Income team has achieved its risk-adjusted returns against global bond benchmarks by implementing a process of country rotation through the broad global fixed income universe. The Global Unconstrained Fixed Income strategy allows the investment team wide latitude and flexibility to generate alpha by taking long or short exposures in both investment-grade and non-investment-grade quality segments.

 

Strategy Profile

 

 

Key Stats*

Strategy AUM 1 $1,571.9
Inception Date June 1, 2008
Current Yield (%) 8.52

Philosophy

Objective

The strategy seeks to generate outsized long term return and alpha.

Investment Philosophy

We believe that currencies and interest rates serve as global economic regulators. As asset prices in the global market overextend in one direction, currencies and interest rates will adjust accordingly, eventually impacting economic behavior and setting economic forces in motion that renormalize valuations in the opposite direction. This provides potential return generating opportunities for our long-short approach to exploit bond markets and currencies that we've identified as either over or undervalued.

Investment Process Summary

We apply a top-down, macro-driven investment process and invest only where we believe opportunities exist with respect to interest rate levels and currency valuations. Bond markets that provide the highest or lowest real yields are identified, as potential longs or shorts, respectively. Currency valuations are also continuously monitored for extremes of over or under valuation.

The Long-Short Approach

The long-short approach enables us to take equally substantial positions in markets we believe to be overvalued as in markets we believe to be undervalued as long as the market size and liquidity characteristics are supportive. However, if we feel a market is over or undervalued, it does not necessarily automatically result in a corresponding short or long position in the portfolio. The market forces to support mean reversion must also be identifiable and present.

Country Rotation

We look to concentrate long positions in 10 to 20 markets with the highest return potential and short positions in the markets that we believe are overvalued and are likely to decline. Real rates are combined with currency analysis to derive value. Secular trends, political and monetary conditions, and business cycle risks are also considered in determining the likelihood of capturing the value we see in real interest rates and contribute to country-weighting decisions.

Currency

Currency management is focused on real interest rates, currency valuation and the perceived impact of currency valuations, on economic conditions and inflation. Currency valuations tend to stretch but not break, and the inflection point preceding mean reversion is often signaled by a change in economic behavior. We look for these signs of behavioral change and supporting economic data that will act as a catalyst for renormalization of valuations. Long currency positions typically result from unhedged bond investments but may also be taken independently through cross hedges if we believe interest rate values are divergent from currency valuation. Short positions will typically be taken in the most overvalued markets when we believe they will decline and potentially generate return.

Duration Management

We concentrate long investments along the curve in countries where we believe the value is potentially greatest. As a result, our long positions tend to have an intermediate- to long- duration bias in markets demonstrating high real yields. Conversely, short duration positions can be taken when countries demonstrate low real yields, high inflation risks, and when we believe the prospects for rising interest rates are high.

Sector and Issue Selection

For clients who desire and permit the use of corporate bonds, we tactically invest in credit when spreads are wide and investors are compensated for taking additional credit risk. An allocation is only made when we feel confident that monetary easing will lead to economic recovery and the renormalization of credit spreads. By only accepting credit risk during the most attractive part of the credit cycle, we feel we are able to take on less credit risk relative to investors owning credit permanently while potentially generating high absolute returns as spreads compress.

At a Glance

  • We seek to generate outsized long term return and alpha regardless of market conditions through strategic investment in countries, currencies, sectors, and securities
  • Universe: Primarily sovereign debt and currencies of developed or emerging countries; opportunistic exposure to corporate debt of developing or emerging countries. Derivative instruments may be used to gain long, short, or hedged exposure to bond or currency markets
  • Country, duration, and currency limits allow for long or short positions
  • Long investments are typically concentrated in 10 to 20 countries’ bonds or currencies that we believe offer the most attractive absolute return potential
  • Short positions are only established in interest rates or currencies that we think are extremely overvalued, will fall in value, and can potentially generate absolute return
  • The portfolio can hold up to 35% of securities and respective currencies rated below investment-grade quality at the time of purchase

Portfolio Managers

Jack P. McIntyre, CFA

Portfolio Manager

Anujeet Sareen, CFA

Managing Director & Portfolio Manager

Paul Mielczarski

Head of Global Macro Strategy & Portfolio Manager

Brian L. Kloss, JD, CPA

Portfolio Manager

Tracy Chen, CFA, CAIA

Portfolio Manager

View Full Fixed Income Team

Performance*

Characteristics*

  • Portfolio Characteristics
  • Quality Allocation
  • Duration Allocation
  • Region & Currency

Portfolio Characteristics

Portfolio Characteristics

As of 12/31/2025

Characteristic
Brandywine Global
F3MTB
Avg. Quality 2A--
Avg. Maturity (Years)13.20-
Avg. Effective Duration (Years)3.100.25
Avg. Coupon (%)5.53-
Current Yield (%)8.52-
Avg. Yield-to-Maturity (%)8.443.60
Number of Issues44-

Quality Allocation

Quality Allocation

As of 12/31/2025

Quality Rating
Brandywine Global (%)
AAA5.2
AA41.7
A5.8
BBB19.7
BB or Lower27.6

Duration Allocation

Duration Allocation

As of 12/31/2025

Duration Range
Brandywine Global (%)
<1 Year43.8
1-3 Years7.5
3-7 Years14.6
7-10 Years24.0
10+ Years-
No Duration10.1

Region & Currency

Region & Currency

As of 12/31/2025

Region
Country (%)
Currency (%)
Asia-Pacific ex-Japan0.217.6
Emerging Markets34.431.2
Europe ex-Eurozone13.40.2
Eurozone--
Japan--
Middle East & Africa--
North & Central America51.950.9
South America--
Supranational--
Other0.1-

Videos

Global Macro Overview

4th Quarter 2025 | January 16, 2026

Head of Global Macro Strategy & Portfolio Manager Paul Mielczarski discusses his macroeconomic outlook and where he sees opportunities.

Download Slides | Read Transcript

Paul Mielczarski

Head of Global Macro Strategy & Portfolio Manager

Investment Options

Available Investment Options

Global Unconstrained Fixed Income
Separate Accounts
BG Global Unconstrained Fund
U.S. Mutual Funds/ETF
FTGF Brandywine Global Fixed Income Absolute Return Fund
Cross-Border Irish Funds
1
The Firm's AUM includes Diversified Value Equity non-discretionary assets of $289.8M and Fundamental Equity non-discretionary assets of $3,830.0M, both of which are reported on a one-month lag.

2
The "Blended Weighted Average Credit Quality Rating" is determined as follows: in line with the methodology used by Bloomberg Global indices, the middle rating from the three major NRSROs (S & P, Moody's, and Fitch) will be assigned to each security. In the event that ratings are provided by only two agencies, the lowest rating will be assigned. If only one agency assigns a rating, that rating will be applied. If the security is not rated by one of the three major agencies, U.S. treasuries and certain U.S. agencies are given the U.S. issuer rating. Sovereign treasuries are given the sovereign issuer rating. All other unrated securities are given an internal rating following the credit ratings procedures. The equivalent numerical rating is assigned to each security based on the Security Level scale. A Portfolio Level scale is applied on the weighted average calculation to round for fractional numerical ratings and then converted to an alpha weighted average rating. Cash is included and received the highest rating.

Data is obtained from Bloomberg (©2026, Bloomberg Finance LP) and is believed to be accurate and reliable.

*Supplemental information to the attached Global Unconstrained Fixed Income GIPS Report, which provides gross and net performance of the named strategy and a detailed description of the performance calculation methodology, index descriptions, and other disclosures. Gross performance returns include transaction costs but do not reflect the deduction of Brandywine Global's management fee. Net performance is calculated using a model approach whereby we use the highest tier of the appropriate strategy's fee schedule as disclosed in Part 2A of the Firm's Form ADV. All performance results are presented before custody charges, withholding taxes and other indirect expenses. Performance results of the named strategy are presented gross and net of management fees. Brandywine Global characteristics were derived using a representative account of the named strategy. In most cases, representative account and composite performance and characteristics will vary slightly. Investment objectives are aspirational in nature, inherently uncertain, and should not be regarded as a guarantee of future performance. Past performance is no guarantee of future results.

Inception Date: June 1, 2008

F3MTB = FTSE 3 Month T-Bill Index

Returns shown in USD

Brandywine Global Investment Management, LLC (the "Firm") is a wholly owned, independently operated, subsidiary of Franklin Resources, Inc. Brandywine Global Investment Management, LLC claims compliance with the Global investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Brandywine Global Investment Management, LLC has been independently verified for the periods January 1, 1993 through June 30, 2024. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm's policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. The Global Unconstrained Fixed Income Composite has had a performance examination for the periods July 1, 2011 through June 30, 2024. The verification and performance examination reports are available upon request. Policies for valuing investments, calculating performance, and preparing GIPS Reports are available upon request. Disclosed total firm assets represent the total market value of all discretionary and nondiscretionary, fee-paying and non-fee-paying assets under the Firm's management. GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. The Global Unconstrained Fixed Income Composite (the "Composite") Inception date: June 1, 2008. Creation date: June 1, 2012. The Composite includes all fully discretionary, fee-paying, actively managed Global Unconstrained Fixed Income accounts with limited client mandated restrictions. Portfolios are constructed by synthetically reproducing the alpha (independent of the beta) generated by the Firm's Global Opportunistic Fixed Income Strategy. The use of derivatives (currency forwards and futures) will increase risk in the strategy. Alpha can be synthetically reproduced based on securities held in the portfolio, or as an overlay on securities held by clients outside of the portfolio (Unfunded Notional Value). The Unfunded Notional Value (in millions) was $210.4 at Dec 31, 2010; $229.5 at Dec 31, 2009; and $350.9 at Dec 31, 2008. This Unfunded Notional value is used in the asset-weighted composite return, but is not included in the Composite Market Value. No Commercial Paper will be employed to implement the Composite's strategy. The Composite utilizes over-the-counter forward exchange rate contracts to manage its currency exposure, these contracts are valued daily using closing forward exchange rates. Brandywine Global uses WM/Reuters daily FX rates taken at 4 p.m. London time. Benchmark indices' exchange rates may vary from Brandywine's exchange rates periodically. Effective March 31, 2016, the composite was changed from "Global Opportunistic Absolute Return" to more accurately reflect the strategy's investable universe. This primary benchmark was changed effective 04/01/2020 from the London-Interbank Offered Rate (LIBOR) to the FTSE 3-Month U.S. Treasury Bill Index. This composite benchmark change was made in anticipation of the LIBOR being discontinued. Retroactively applied since composite inception date. The FTSE 3-Month U.S. Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. Each month the index is rebalanced and the issue selected is the outstanding Treasury Bill that matures closest to, but not beyond 3 months from the rebalancing date. Preliminary data, if so noted, reflects unreconciled data for the most recent reporting period. Portfolios are valued daily on a trade date basis and include dividends and interest as well as all realized and unrealized capital gains and losses. Return calculations at the portfolio level are time-weighted to account for periodic contributions and withdrawals. Performance results are calculated on a before tax, total return basis. The Composite returns consist of size-weighted portfolio returns using beginning of period values to weight the portfolio returns. Monthly linking of interim performance results is used to calculate quarterly and annual returns. Composite's valuations and returns are computed in U.S. Dollars ("USD"). The results are presented in USD or in other currencies (to accommodate overseas investors), the latter by converting monthly USD returns into other currency returns using the appropriate currency exchange rate returns. Gross returns reflect the deduction of trading expenses. Net-of-fees returns is calculated using a model approach whereby we use the current highest tier of the appropriate strategy's fee schedule as disclosed in the Form ADV. Composite dispersion is calculated using the asset-weighted standard deviation method for all portfolios that were in the Composite for the entire year. Composite dispersion is not presented for periods with five or fewer portfolios. The number of accounts and market values are as of the end of the period. The three-year annualized standard deviation, calculated using gross-of-fee returns, measures the variability of the composite and the benchmark returns over the preceding 36-month period. Gross-of-fees returns are used to calculate the presented risk measures. Past performance is no guarantee of future results. A complete list of composites, and limited distribution pooled funds descriptions as well as a list of broad distribution pooled funds is available upon request. The Institutional Client Separate Account Management Fee Schedule (minimum initial investment: $75 million): 0.700% on the first $75 million; 0.650% on any portion of assets in excess of $75 million or a base fee of 0.20% plus 15.00% of performance in excess of the 3 month Treasury Bill (FTSE Index). Institutional Client Commingled Account Management Fee Schedule (minimum initial investment: $1 million): 0.650% Flat fee on all assets or a base fee of 0.20% plus 15.00% of performance in excess of the 3 month Treasury Bill (FTSE Index) Additional information on the Firm's fee schedule can be found in Form ADV Part 2A which is available upon request.

General Disclaimers: This material has been prepared by Brandywine Global Investment Management, LLC ("Brandywine Global") and is provided to certain qualified institutions, financial intermediaries, and institutional investors for informational purposes only. It may not be reproduced or redistributed without Brandywine Global's prior written approval. This material is not intended to be a forecast, research, or investment advice, and is not a recommendation, or an offer or solicitation to buy or sell any securities or to adopt any particular investment strategy. The information set forth herein has been derived from sources believed to be accurate, reliable, and current as of the date of this material, but is subject to change without notice. The opinions expressed may differ from those of other Brandywine Global portfolio management teams and our affiliates. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be, interpreted as recommendations. The material was prepared without regard to specific objectives, financial situation or needs of any investor and should not be used as the basis of any investment decision.

Risk: All financial investments involve an element of risk. Past performance does not guarantee future results. The value of investments and the income derived from investments will fluctuate and a loss of principal can occur.

Foreign securities, foreign currencies, and securities issued by U.S. entities with substantial operations outside of the U.S. can involve additional risks relating to political, economic, or regulatory conditions in foreign countries. These risks include market/currency fluctuations, withholding or other taxes, trading, settlement, custodial, and other operational risks, and less stringent investor protection and disclosure standards in some foreign markets. All of these factors can make foreign investments, especially those in emerging markets, more volatile and potentially less liquid than U.S. investments. In addition, foreign markets may perform differently from the U.S. market.

Transactions in any option, future, commodity, or other derivative product is not suitable for all persons and accordingly, investors should be aware of the risks involved in trading in such instruments. Transactions in derivatives have the potential to increase liquidity risk and introduce other significant risk factors of a complex character. All securities trading, whether in stocks, options, or other investment vehicles, is speculative in nature and involves substantial risk of loss. No assurance, representation, or warranty is made by any person that any of the aims, assumptions, expectations, objectives, and/or goals stated herein will be achieved. Nothing contained in this material may be relied upon as a guarantee, promise, assurance, or representation as to the future.

Fixed income securities are subject to the risks associated with debt securities generally, including credit, liquidity and interest rate risk. High yield and lower-rated fixed income securities involve greater risk than investment-grade securities. Asset-backed, mortgage-backed or mortgage related securities are subject to additional risks such as prepayment and extension risks. High yield bonds possess greater price volatility, illiquidity, and possibility of default.

Equity investments are subject to market risk. The value of investment may fluctuate in response to the prospects of individual companies, particular sectors, and/or general market conditions. Investments in in speculative and/or small-cap, mid-cap and micro-cap companies may involve a higher degree of risk and volatility than investments in larger, more established companies, including such risks as lack of product diversification, potentially insufficient capital resources and greater exposure to business and economic cycles.

Portfolio Structure: Each client’s portfolio is individually managed and may vary from the information shown in terms of allocations, portfolio holdings, characteristics, and performance. Current and future portfolio compositions and performance may be significantly different. Any securities, sectors or allocations referenced may or may not be represented in portfolios of clients of Brandywine Global, and do not represent all of the securities purchased, sold, or recommended for client portfolios. The reader should not assume that any investments in securities, sectors and/or markets identified or described were or will be profitable or that similar investments will be available in the future.

Outlook: Economic and market forecasts presented herein reflect a series of assumptions and judgments as of the date of this material and are subject to change without notice. These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client. Actual data will vary and may not be reflected herein. These forecasts are subject to high levels of uncertainty that can affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Certain information or statements contained herein may constitute a forward-looking statement. Forward- looking statements are predictive in nature and speak only as of the date they were made. Brandywine Global assumes no duty to and does not undertake to update forward-looking statements. Forward-looking statements refer to future events or conditions and are subject to a number of assumptions, risks and uncertainties that could cause actual results or events to differ materially from current expectations.

Third-Party Ratings: Any unpublished third-party rankings, awards or similar groupings have inherent limitations and qualifications, and are not indicative of the experience of any client or investor or of the future performance of any product described herein. There can be no assurance that the universe upon which the ratings or awards were based included all investment products within each category that are actually in operation or existence. The investment products on which the ratings were based may differ substantially in terms, objective, strategy, target risk return profile and certain other significant respects from those referenced herein.

Indices/Benchmarks: Indices are unmanaged and are not available for direct investment. Indices are not subject to fees and expenses typically associated with separate accounts or investments in funds. References to indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only and do not imply that the portfolio will achieve similar results. The index composition may not reflect the manner in which a portfolio is constructed. While an adviser seeks to design a portfolio which reflects appropriate risk and return features, portfolio characteristics may deviate from those of the benchmark.

Selection of Representative Account: Representative accounts are generally the least restrictive account in a composite at the time of selection. Each client account is individually managed; individual holdings will vary for each account and there is no guarantee that a particular account will have the same characteristics as described. Actual results may vary for each client due to specific client guidelines, holdings, and other factors. In limited circumstances, the designated representative account may have changed over time, for reasons including, but not limited to, account termination, imposition of significant investment restrictions, or material asset size fluctuations.

Environmental, Social and Governance (“ESG”): This material discusses Brandywine Global’s current efforts to integrate responsible and sustainable investing principles into its investment process. Certain examples are provided herein for illustrative purposes only and are not intended to be representative of Brandywine Global’s investment process with respect to every investment. ESG investments may be viewed as “sustainable, “responsible”, or “socially conscious” among other names. Analysis and integration of ESG factors is qualitative and subjective by nature, and there is no guarantee that the ESG criteria used, or judgment exercised, by Brandywine Global will reflect the values of any one particular investor. Different investment managers may utilize and evaluate ESG factors in different ways. Investing in ESG investments carries the risk that under certain market conditions, the investment strategy may underperform strategies that do not utilize a responsible investment strategy. An investment’s ESG performance or Brandywine Global’s assessment of such performance may change over time. ESG is not a uniformly defined characteristic and information used to evaluate ESG characteristics may not be readily available, complete, or accurate, and may vary across providers and issuers. The ESG considerations assessed as part of the research and investment approval process may vary across eligible investments and not every ESG factor may be evaluated for every investment. There is no guarantee that the evaluation of ESG characteristics will be additive to a strategy or account’s performance.

This website and the information contained herein does not constitute and is not intended to constitute an offer of any kind, including securities and accordingly should not be construed as such. Any products or services referenced on this website are for informational purposes only and may not be licensed or permitted to be purchased in your jurisdiction, and unless otherwise indicated, no regulator or government authority has reviewed this website or the merits of the products and services referenced. The content of this website is intended for eligible institutional investors (as such term is defined in any given jurisdiction). Before acting on any information on this website you should be well informed of and observe all applicable laws, rules and regulations of your home jurisdiction and obtain independent advice if required.

Past performance is no guarantee of future results.