The MSIM Quantitative Credit Strategy Model

Our Broad Markets Fixed Income team has developed a proprietary, factor-based framework - the MSIM Quantitative Credit Strategy (QCS) model - to support tactical credit risk positioning over short horizons (typically one to three months) using five core signals: Market Technicals, Risk Sentiment, Business Cycle, Carry and Valuation. Our approach is integrated into our fundamentals-driven decision-making, helping us assess when credit risk premia appear more or less attractive, strengthen investment discipline and improve portfolio performance consistency by combining complementary fundamental and technical inputs into a single, consolidated positioning view.

^{Risk Considerations
Diversification does not eliminate the risk of loss. The value of investments held by the portfolio may increase or decrease in response to economic, and financial events (whether real, expected or perceived) in the U.S. and global markets. As interest rates rise, the value of certain income investments is likely to decline. Investments in debt instruments may be affected by changes in the creditworthiness of the issuer and are subject to the risk of non-payment of principal and interest. The value of income securities also may decline because of real or perceived concerns about the issuer’s ability to make principal and interest payments. U.S. Treasury securities generally have a lower return than other obligations because of their higher credit quality and market liquidity. While certain U.S. Government-sponsored agencies may be chartered or sponsored by acts of Congress, their securities are neither issued nor guaranteed by the U.S. Treasury. Investments rated below investment grade (sometimes referred to as “junk”) are typically subject to greater price volatility and illiquidity than higher rated investments. Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical, currency exchange rates or other conditions. In the event of a default by a sovereign entity, there are typically no assets to be seized or cash flows to be attached. Investing primarily in responsible investments carries the risk that, under certain market conditions, the portfolio may underperform strategies that do not utilize a responsible investment strategy. The portfolio is exposed to liquidity risk when trading volume, lack of a market maker or trading partner, large position size, market conditions, or legal restrictions impair its ability to sell particular investments or to sell them at advantageous market prices. Environmental, Social and Governance (ESG) strategies that incorporate impact investing and/or ESG factors could result in relative investment performance deviating from other strategies or broad market benchmarks, depending on whether such sectors or investments are in or out of favor in the market. As a result, there is no assurance ESG strategies could result in more favorable investment performances.}