Our approach

Our portfolio construction process draws from the firm’s broad research resources to integrate investment ideas generated through in-depth analysis. Bond issues are assessed through internally-developed categories to efficiently allocate risk, rather than through traditional benchmark classifications for sector or industry. In this way, the strategy seeks to break down credit markets in a distinct manner, seeking to add value through discovery of additional sources of alpha and risk reduction.

The strategy emphasizes downside protection, and applies overall volatility, tracking error and individual issuer limits. Duration is typically kept within ±1 year of the Bloomberg Barclays U.S. Long Government/Credit Index.

Watch this one-minute video to hear Josh Lohmeier, Head of North American Investment Grade Credit, discuss the origin of his unique approach portfolio construction and its optimization and integration into our Investment Grade credit strategy.

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Our differentiators

Our unique portfolio construction process uses custom sectors, volatility targeting, and embedded downside constraints with the objective of delivering independent excess returns with low correlation to peers. When combined with credit research, this gives us two sources of excess returns.

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What's your behavioral blind spot?

Most credit managers rely heavily on benchmarks to guide their investment process, but simply matching benchmark performance leaves growth opportunities on the board. By using tracking error as a yardstick instead of a crutch, it is possible to overcome inherent limitations in building a better portfolio, delivering risk-adjusted returns while minimizing volatility.

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Investment grade bonds offer the potential benefits of attractive yields and enhanced diversification. Our unique approach to portfolio construction expands these benefits through additional sources of alpha and risk reduction.

Portfolio construction
as an alpha source

We break down and analyze credit markets in unique ways in order to uncover additional opportunities for alpha and risk reduction for clients.

A better understanding of the benchmark

Our custom framework categorizes bonds by risk characteristics, rather than by traditional classifications of sector or industry. That gives us a head start in identifying bonds with the best risk/return opportunities.

A wide-angle view of risk

Our scenario modeling and risk allocation system analyses our best ideas across a wide spectrum of market environments to help us deliver excess returns regardless of the direction of credit spreads, with focus on downside protection.

Key risks

Investment risk

The value of an investment and any income from it can go down as well as up. Investors may not get back the original amount invested. Some bonds can be called or redeemed prior to maturity resulting in reduced income flows to investors.

Credit and interest rate 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 strategies 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.

U.S. Investment Grade Strategies

The U.S. Investment Grade strategies are investment solutions designed to invest in U.S. investment grade credit and are benchmarked against the Bloomberg Barclays Credit indexes

Aviva Investors
U.S. Long Government Credit

Aviva Investors
U.S. Long Credit

Aviva Investors
U.S. Credit

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