Key features
- Global: We search the world for quality, rather than having a regional bias.
- Focus: We manage a concise, high-conviction portfolio, focused on selecting investment-grade corporate bonds we consider offering the best value and issuers whose environmental characteristics we deem advantageous.
- Value: We seek alpha by exploiting bottom-up inefficiencies, finding mispricing between bonds of the same issuer.
"Our robust process, supported by advanced tools, helps the team exploit inefficiencies in the global corporate-bond market to capture value."
Our investment process
Our investment process begins with a top-down review of the global corporate bond market, where we look at the development of key macro- and microeconomic data, considering technicals, such as new issuance and asset flows into or out of the asset class.
Then, with the use of our proprietary tools, we zoom in and finally identify around 200 attractive issuers from a benchmark universe of more than 2,400 names. Our ESG-risk concept excludes issuers that derive a certain percentage of their revenues from products/activities referenced under “exclusion approach” in the fund’s legal documentation – such as weapons, thermal coal, or tobacco, those we deem the most controversial, those that are in violation of certain global norms and standards the fund seeks to promote, and those not aligned with the United Nations Global Compact Principles.
Once we have determined potential issuers to invest in, we conduct a thorough bottom-up analysis on each potential security, resulting in a fundamental company view that also considers ESG characteristics. By bringing this together with our overall market valuation, we come to a buy/hold/sell decision on each issuer.
We then construct our portfolio based on our considerations of the aspects region, sector, issuer, ESG, currency, and other, as illustrated in more detail below.
A robust risk-management setup, with control and oversight independent of the primary risk owners, provides a solid cover across our entire investment process.
Investment opportunity – excess return through the cycle
We aim to select issuers of high credit quality to generate income over the long term. As individual regions are in various stages of the credit cycle and perform differently at any given point in time, a global portfolio provides better diversification than a single-country or regional approach. This can also significantly reduce the impact of local shocks (for example, Brexit or the European sovereign debt crisis) on a portfolio.
Furthermore, bonds from the same issuer, denominated in different currencies, often exhibit price discrepancies allowing us to create relative-value opportunities. By identifying what we consider the most attractive bonds across the main currencies, we can extract value for our investors, with exchange-rate risk fully hedged.
We believe that ESG considerations have an impact on credit risks but also present opportunities for investors. Also, we expect a change of the investment landscape over time, as sustainability will further gain in importance.
One focus theme of our broad ESG assessment is climate change. We adopt a screening methodology based on pre-defined indicators. We favor companies we deem advantageous, in transition, or offering potential to improve their environmental characteristics, for instance firms that are in transition to a lower-carbon economy. Our goal is to have a high allocation to companies that do well in this respect, according to our bottom-up analyses.
"The global corporate-bond market is broad enough to offer active investors numerous opportunities for excess returns with a high degree of diversification."
Investment beliefs
The global corporate-bond market is slow to react to new trends, and so, presents investment opportunities across regions, industries, structures, currencies, and issuers – an ideal ground for active corporate-bond selectors. In addition, the asset class is very broad, offering good risk diversification potential.
Our guiding principles
- Our combined portfolio manager/analyst model facilitates swift decision-making and helps capture and preserve value for investors.
- We strive to invest with high conviction in select corporate bonds whose spreads more than compensate for the credit risks taken.
- Active portfolio management and continuous monitoring of exposures through fundamental credit analysis that considers ESG characteristics adds value over time.
Our investment team
Christian Hantel, Head of Global Corporate Bonds, and Marc van Heems, Deputy Portfolio Manager, manage the fund. They are supported by the entire Corporate Bonds team and the other teams within Fixed Income.
