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Strategy overview

The U.S. Investment Grade Corporate strategy aims to deliver consistent excess returns while maintaining a low tracking error relative to the Bloomberg US Corporate Investment Grade Index.

  • The U.S. Investment Grade Corporate strategy invests primarily in investment grade U.S. dollar-denominated corporate fixed income securities.
  • Investment Grade focused with a minimum rating of BBB
  • The strategy has a duration target of 6-8 years (portfolio duration +/-1 year from benchmark index).
  • Expertise in corporate credit selection
    • Focus on companies with stable to improving credit profile
    • Prefer large companies that generate significant cash flow through the business cycle
    • Focus on large and liquid bond issues
    • Selectively add positions after leveraging event, particularly large M&A transactions

We believe:

  • Security and sector selection has the potential to pay over time through income
  • Liquidity premiums can be exploited
  • Interest rate anticipation increases risk (volatility) and must be controlled at all times.

Our approach

Investment philosophy and style

Our bottom-up, fundamental process is combined with robust, top-down risk management tools that aims to meet the objectives of principal preservation, liquidity and consistent excess returns over the long term.

We employ a fundamental investment process to construct a diversified portfolio of high quality fixed income securities that aims to deliver consistent excess returns (income) with low volatility.

Fundamental security selection

We add value through bottom-up fundamental security selection, selecting those securities that fundamental analysis shows carry the highest levels of intrinsic value. Each security under consideration is subject to ongoing qualitative, quantitative and structural research. Our strategy is to capture an income advantage that aims to deliver excess returns over the long term. We believe that this systematic security selection approach contributes the most consistently to alpha.

Emphasis on risk management

Capital preservation mind-set focusing on mitigating downside potential

  • Mandate and policy controls
  • Full, multidisciplinary vetting of client policies and objectives
  • Multiple levels of review
  • Clear accountabilities and cross checks
  • High quality focus reduces credit risk

U.S. Fixed Income team expertise

  • Stable team of highly experienced analysts and portfolio managers executing a proven, repeatable process
  • Distinct and specialized areas of expertise among fixed income team members dedicated to fundamental, bottom-up analysis
  • Our team-based structure enhances our ability to recognize and respond quickly to the nuances of opportunity and risk in the U.S. fixed income market.

Additional information

Inception
June 2010
Primary benchmark
Bloomberg US Corporate Investment Grade Index
Vehicle
Separate Account

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