13 Mar 2026
In the latest edition of Strategic Thinking Out Loud, Alex Pelteshki, Investment Manager, explores how the wave of rolling recessions – sweeping through sectors from Energy to Software – is reshaping opportunities across credit markets. He discusses why this environment highlights the advantage of a concentrated, index-agnostic active management approach that is focused on precise security selection.
In the past three years we have gotten used to seeing ongoing rolling recessions in different sectors of the economy.
We moved from Energy to Real Estate, US regional banks, EU chemicals and Software, all sectors that suffered mini-recession cycles recently.
The latest mini recession seems to be Artificial Intelligence (AI) driven and happens at a point in time when credit spreads are near historic tights on the surface, but while we no longer have a super strong employment market. A challenging and potential turning point in bond markets which have been immune from any sort of prolonged sell offs recently.
The natural question we often get asked lately, is what is the best way for investors to continue to extract a healthy amount of yield in this environment while avoiding the pitfalls and the dangers that come with those stretched valuations? This is the perfect scenario for a truly active credit and bond manager and should be a situation that highlights the value of active management. On one hand, headline index spread levels limit the generic upside of owning the market and being well diversified. On the other, the rolling recessions also mean that a broadly diversified approach ensures that you capture some of these losers as well.
In contrast, our approach is prime for this environment. We are index agnostic and very concentrated. We excel at pricing credit risk and invest in a very focused fashion. We don’t have sector weights and underweights or overweight. We focus on delivering alpha from security selection, and if we do not like a sector or a name, we do not have to own any of it and we don’t.
Our approach ensures not only that we should be able to pick winners from a diminishing pot, but more importantly, we should be able to avoid losers as we are not forced into unwanted sector relative or index relative positions.
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