Our approach to investment grade credit investing

Our portfolio construction process draws from the firm’s broad research resources to integrate investment ideas generated through in-depth analysis. Investment grade bonds are assessed using our custom sector framework to allocate risk efficiently, rather than through traditional benchmark classifications for sectors or industries. In this way, our investment grade strategies seek to break down credit markets in a distinct manner, seeking to add value through the discovery of additional sources of return and risk reduction. Portfolio construction is enhanced by our global collaborative team-based approach and the integration of non-binding ESG factors into our investment process.

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Potential benefits

Investment grade bonds offer the potential benefits of attractive yields and enhanced diversification. Our unique approach to portfolio construction helps capture these benefits and deliver consistent returns relative to the benchmark. We seek to achieve this with lower correlation to both the direction of credit markets and to peers, while still providing downside protection in bear markets.

Portfolio construction

Our proprietary risk allocation process uses custom sectors and targets volatility to match the benchmark. This allows a more flexible risk allocation approach when incorporating our best idiosyncratic ideas, while also generating returns from multiple sources.

Downside protection

Protecting portfolios to the downside should be part of any credit investment process given the asymmetry of returns. Our proprietary risk allocation process has downside protection embedded within it. The integration of ESG factors into the process is another, non-binding, step we take to protect to the downside. 

Connected thinking

Our portfolios benefit from the cross-pollination of ideas from our global investment professionals across all asset classes. This is facilitated by an integrated research framework across equities and credit with strong in-house ESG expertise.

Key risks

For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.

Investment risk

The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency and exchange rates. Investors may not get back the original amount invested.

Credit risk

Bond values are affected by changes in interest rates and the bond issuer's creditworthiness. Bonds that offer the potential for a higher income typically have a greater risk of default.

Illiquid securities risk

Certain assets held in the funds could, by nature, be hard to value or to sell at a desired time or at a price considered to be fair (especially in large quantities), and as a result their prices could be very volatile.

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