Based in Vancouver, Canada, the PH&N Fixed Income team was formally established in 1984 and since then has grown to become one of Canada’s largest fixed income managers. The team manages more than $138 billion in fixed income assets and comprises 48 investment professionals who are fully dedicated to the analysis, trading, and risk management of these assets.1
The PH&N Fixed Income team’s specific strengths as a bond manager are directly related to the depth of resources – both people and technology – that they dedicate to the management of fixed income portfolios. The specialized expertise within the group is organized into fully integrated teams that follow a collaborative investment process to support specific mandates or functions, such as universe and short-term bonds, long bonds and liability-driven investments (LDI), client servicing and research, credit analysis, insurance/regulated entities mandates, and quantitative research, among others.
1As of December 31st, 2024
Our philosophy: Adding value while controlling risk
The primary objective of the PH&N Fixed Income team is to add value while controlling risk. The team believes that the key to achieving this objective is through the use of multiple investment strategies, supported by rigorous internal credit analysis to identify high-quality investments that offer good relative value.
Interest rates
- Duration
- Yield curve
- Real return bonds
- Foreign sovereign
Credit
- Sector
- Quality
- Credit curve
- Industry
- Security selection
- Foreign issuers
Liquidity
- Government sectors
- Mortgages
- Mortgage-backed
securities - Security selection
The key objective of our fixed income approach is to add value while controlling risk. The following characteristics distinguish our approach to fixed income investing:
Value-add
The use of multiple strategies to add value
Risk / reward profile
A conservative approach, with moderate positions taken concurrently in a number of strategies focusing on the risk/reward profile for the strategy and the portfolio overall
Yield-enhancing strategies
An emphasis on the use of yield-enhancing strategies, such as corporate bonds, mortgages, and global credit (where applicable)
Rigorous monitoring
An emphasis on risk controls using strict guidelines and rigorous monitoring
ESG
Incorporating a comprehensive risk-based approach that includes environmental, social, and governance (ESG) downside risk analysis for applicable types of investments.*
*Certain investment strategies or asset classes do not integrate ESG factors, including but not limited to money market, passive and certain third-party sub-advised strategies.
Investment process
The below graphic illustrates the key inputs that make up our continuous portfolio construction and risk management process.
Makes up the first input into an investment decision. It refers to the fund manager’s initial trade idea; for example, based on the fund manager’s holistic view on the relative attractiveness of two sectors, they consider selling one to fund the purchase of another.
Make up the second input, whereby the fund manager consults with specialists on the team to obtain their views and input on a potential trade. The specialists’ expertise in that particular sector is derived from trading bonds daily, monitoring the new issue market, following market trends, and performing continuous fundamental research.
The third input is from M-Lab, the team’s proprietary quantitative-based research platform. Developed in house, M-Lab generates return forecasts on trades based on macroeconomic, technical, and valuation indicators that are embedded within the platform. M-Lab is more of a decision-support tool as opposed to a decision-making tool, helping to test the fund manager’s intuitions.
The fund manager then synthesizes the three inputs into an investment thesis.
Next, we assess the risk considerations of the trade using BondLab, our proprietary quantitative risk management tool. Through BondLab, fund managers can analyze individual strategies and how they interact with the portfolio, create model portfolios with various exposures, and stress test the portfolio in a variety of different environments, as well as run tracking error analysis. All of this helps the fund managers assess the potential risks of the trade as well as size the trade appropriately.
Before any trade is implemented, the fund manager ensures the investment mandate restrictions for the portfolio will remain in compliance post-trade.
Once the above is satisfied, the portfolio decision is then implemented.
BondLab generated performance attribution helps the fund manager assess whether the trade is performing in line with expectations. Trades can be adjusted as necessary based on this feedback, which forms part of the continuous nature of our portfolio construction and risk management process.