By Anando Maitra, Senior Portfolio Manager & Head of Systematic Research and Strategies at Lombard Odier Investment Managers

I recently spent time in Lisbon. The Portuguese capital combines history, culture and a joy of life in a way that is hard to match. Set on the hills above the Tagus, the city offers impressive views of the river and the rooftops of the old town at almost every corner. I particularly enjoy spending time in Alfama, the city’s oldest district. Its narrow streets, charming little squares, and traditional cafés create a rare, almost timeless atmosphere that is hard to find in larger cities today. For me, the true culinary highlights are the wonderfully fresh fish dishes and, of course, the iconic Pastéis de Nata, best enjoyed warm, straight from a local pastry shop like «Manteigaria», where they’re made fresh throughout the day.

What makes Lisbon particularly appealing is its balance between tradition and modernity. Historic buildings shape the city, while new companies, technologies and ideas are emerging as an innovative growth engine. The city preserves its character while remaining open to change – a balance that is also crucial for investing.

What Lisbon and Switzerland Have in Common

In Switzerland, too, it is evident that long-term success often arises where proven strengths are preserved while room is also created for innovation. Switzerland stands for stability, reliability and high standards of quality. At the same time, its financial sector is internationally oriented, adaptable and closely connected to global capital markets.

These qualities are also reflected in many conversations with Swiss clients and partners. The collaboration is characterised by professionalism, a high level of expertise and a strong relationship of trust. The focus is rarely on short-term trends. Instead, discussions often centre on how wealth can be built robust and sustainable across different market phases. After years of low interest rates, regular income has returned to the fore – albeit in a market environment in which liquidity, tradability and risk control have become more important.

Anando Maitra from Lombard Odier Investment Managers (Image: Courtesy)

Opportunities in the High-Yield Segment

The high-yield segment shows that the right balance between continuity and adaptability is also a hallmark of good investors. At present, the segment offers a variety of opportunities. The carry offering is attractive, particularly while companies overall are benefiting from solid fundamentals. Furthermore, high-yield investments have remained robust in the face of uncertain markets in recent years.

However, the market structure has changed. Since the financial crisis 2008, banks have significantly reduced their trading inventories, while the global high-yield market has grown substantially. As a result, the liquidity of many bonds has declined. In volatile market phases, this can lead to higher costs and limited tradability.

This is where we see a key advantage of modern, systematic investment solutions. By using liquid credit derivatives alongside government bonds, we can build efficient exposure to the high-yield market while also increasing the flexibility of the portfolio. The continued development of derivatives markets now enables significantly more precise management of risk, liquidity and return.

Similarly, we heed caution when considering investments where the promised liquidity does not match the actual liquidity of the underlying assets. Such structures can become problematic in periods of stress. The combination of continuity and adaptability can be very valuable. Switzerland embodies this mindset in its financial culture: long-term oriented, quality-focused and, at the same time, open to change where necessary. In the high-yield segment, adaptability also pays off. For investors today, this means not viewing attractive sources of return in isolation, but always in conjunction with liquidity, transparency and risk management.

Overall, we believe that Swiss investors are well positioned to benefit from the current landscape in high yield, provided they maintain a focus on quality, transparency and disciplined risk management.