Our approach
Using a holistic investment approach, our dedicated local fixed income investment team is fully integrated into an extensive global fixed income platform and places a strong emphasis on portfolio construction and risk. Our investment objective is to outperform the FTSE TMX Canadian Bond Universe on both a relative and risk-adjusted basis over a full market cycle.
Potential benefits of Canadian Core Plus investment
We aim to provide enhanced and consistent long-term returns that are less reliant on market directionality with lower volatility and improved downside protection. Our key differentiators are:
Portfolio construction
We look to maximize portfolio efficiency, a portfolio’s return potential for a given set of risk constraints. By maximizing efficiency, it is possible to exploit the structural inefficiencies of an index (or market) and leverage broad idiosyncratic mispricing with minimal risk. While this focus on efficiency may appear intuitive, it can allow investors to uncover and take advantage of many non-intuitive positioning opportunities.
Connected thinking
We have an established investment team in Canada, complemented by robust global credit investment resources, who assess investment opportunities and risks from a Canadian perspective. Our common investment language, based on a framework of macro economic factors, fundamentals, valuations and thematics (“MFVT”) ensures that we capture the most efficient & reliant opportunities, both market and credit, within our portfolios.
Resilience targeting
Staying honest to fixed income’s purpose. Resilience targeting is about choosing the ‘efficient’ portfolio that best leverages our central investment thesis but will not be materially affected should the thesis fail to deliver. This helps build strong downside protection and positive asymmetry in expected returns for the portfolio.
Key risks
Fixed income investments have a reputation for safety but are not without risks. The risks below are illustrative. Other risks also exist. For further information, please contact our investment team.
Interest rate risk
Changes in interest rates are one of the most important factors that could affect the value of an investment. Rising interest rates tend to cause the prices of fixed income securities to fall. Callable fixed income debt securities are likely to be called when interest rates are falling because the issuer can refinance at a lower rate. This strategy will make the use of bond futures or forwards to minimize unintended interest rate risk when making an allocation to non-Canadian dollar securities.
Foreign exchange risk
All exposures to fluctuations in foreign currency movement against the Canadian dollar will be substantially hedged by use of currency forwards.
Credit risk
The credit rating or financial condition of an issuer may affect the value of a fixed income debt security. Generally, the lower the quality rating of a security, the greater the expected risk that the issuer will fail to pay interest fully and return principal in a timely manner. Adverse economic conditions or changing circumstances may weaken the capacity of the issuer to pay interest and repay principal and may cause a security to lose some or all of its value.
Liquidity risk
All investments carry liquidity risk, that is the risk that a security will not be able to be sold in a timely and cost- effective manner. An investment may be less liquid if it is not widely traded and such investments may experience significant deviations in pricing from their fundamental intrinsic value. As all bond market securities, Canadian fixed income instruments are subject to liquidity risk. Liquidity in the government of Canada and provincial bond market is relatively high, while liquidity in the Canadian investment-grade corporate bond market is moderate. Liquidity in the global high-yield bond market is poor to moderate. Liquidity risk will vary with changes in market tone and macro risk.
Explore our Canadian Fixed Income range
Aviva Investors Canadian Core
This strategy aims to provide enhanced and consistent long-term returns that are less reliant on market directionality with lower volatility and improved downside protection. Our investment objective is to outperform the FTSE TMX Canadian Bond Universe by 30bps over a full market cycle, focusing on the local Canadian Investment-Grade Market.
Aviva Investors Canadian Core Plus Climate Transition
This strategy aims to provide investors with a dual outcome of outperforming the FTSE TMX Canadian Bond Universe by 80bps over a full market cycle, while allocating to those companies that are doing the most to support solutions, or managing the risks and opportunities, associated with climate
Canadian Portfolio Management Team
Sunil Shah
Head of Canadian Fixed Income & Senior Portfolio Manager
Jane Xie
Portfolio Manager
Nayeem Islam
Portfolio Manager
Trevor Li
Portfolio Manager
Aviva Investors Fixed Income Views
Disclaimer: These views are authored by various individuals within Aviva Investors.
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Bond Voyage: A journey into fixed income
4 Nov. 2024
This month, our fixed-income investment teams discuss US elections, IMF meetings, US versus European high yield, managing declining rates for cash, and what the future might hold in store for gilts.
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Power play: Why political risk matters for emerging-market debt investors
11 Oct. 2024
In this article, we explore why measuring and continually monitoring geopolitical risks is essential for investors in EM debt.
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Bond Voyage: A journey into fixed income
10 Oct. 2024
In our October edition of Bond Voyage, our fixed-income teams reflect on US elections, US rates, France’s slide towards the periphery of EU issuers, and ESG considerations in Asia.
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Multi-asset allocation views: Where next for markets after the summer storms?
9 Oct. 2024
Volatility returned to markets in the third quarter of the year. While the short-term drivers are not unduly worrying, Sunil Krishnan argues multi-asset investors will need to be watchful over the medium term.
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Bond Voyage: A journey into fixed income
16 Sep. 2024
This month, we discuss the books that inspired our investment teams over the summer.
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Standing tall: Three factors behind the resilience of emerging-market debt
13 Sep. 2024
In this article, we explore what’s behind emerging markets’ impressive performance in the face of global economic volatility, and investigate how EM debt investors can take advantage.
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An ABS renaissance? Why it may be time for insurers to reconsider asset-backed securities
2 Sep. 2024
Securitisation performs a vital role in capital markets and asset-backed securities have historically been a core holding for insurance companies. This article revisits the investment thesis for ABS and explores why the stage may be set for something of a renaissance.
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Bond Voyage: A journey into fixed income
9 Aug. 2024
In this summer edition of Bond Voyage, we discuss topical themes in liquidity, emerging-market debt, investment-grade credit and global sovereign bonds.
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Time to get active: Finding opportunities in emerging-market debt
30 Jul. 2024
Emerging markets have remained robust amid the economic and political uncertainties of 2024, but active management will be important if debt investors are to identify standout performers over the coming months.
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Riding the technical tailwinds: The outlook for investment-grade credit
25 Jul. 2024
Credit markets have had a comparatively easy ride so far in 2024, and investment-grade corporate spreads are now at some of their tightest levels for a long time. But investors must guard against complacency.
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Liquidity optimisation for insurers: Building a bespoke portfolio solution
9 Jul. 2024
In the third part of our liquidity optimisation series, we look at how bespoke liquidity portfolios that take into account the interplay between different assets can suit the needs of insurers.
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The difficult last mile: Inflation, Treasury supply and the outlook for global sovereign bonds
4 Jul. 2024
With the focus shifting from interest rate cuts to the likelihood of rates staying higher for longer, Steve Ryder and Daniel Bright assess the possible outcomes and implications of higher rates and monetary policy divergence in debt markets.
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Bond Voyage: A journey into fixed income
2 Jul. 2024
In a special European Championships edition of Bond Voyage, we discuss topical themes in liquidity, emerging-market debt, investment-grade credit and global sovereign bonds (with a little help from Cristiano Ronaldo and Kylian Mbappé).
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Bond Voyage: A journey into fixed income
10 Jun. 2024
This month, we discuss fiscal discipline in emerging markets, investment-grade credit portfolio construction, potential opportunities for sovereign investors in Canada and the merits of a developed-market focus in global high yield.
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Emerging-market debt turns the corner: The EM investment universe grows amid improved resilience
21 May 2024
Emerging-market debt analyst Carmen Altenkirch reports back from the recent International Monetary Fund (IMF)/World Bank meetings in Washington.
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Bond Voyage: A journey into fixed income
13 May 2024
This month, we discuss Spring Meetings and the path for rates.
Need more information?
For further information, please contact our investment sales team.