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.
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.
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.
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.
Read more about the strategies
Fixed income views
Health first: Finding resilience in pharmaceuticals
2 Jul 2020
COVID-19 has led to a new appreciation of the importance of healthcare in ensuring all members of society thrive. So where should investors be looking to find resilience in an industry facing enormous change?
What do rising US-China tensions mean for global markets?
24 Jun 2020
In the latest instalment of our editorial series, Link, Aviva Investors experts discuss the prospects for financial markets and the world economy in the face of escalating hostilities between the US and China.
Defined Benefit pensions de-risking: A covenant and investment view
23 Jun 2020
In the midst of the COVID-19 shock, Felix Mantz from Lincoln Pensions and Joachim Sudre from Aviva Investors explore how defined benefit pension schemes should plan their journey towards an end game and adopt a more holistic approach to risk.
COVID-19: Will credit markets remain open for business?
1 May 2020
While concerns around credit market liquidity have been rising since the global financial crisis, the COVID-19 sell-off has highlighted how fragile liquidity can be during periods of real stress. Colin Purdie discusses the short- and long-term implications for investment grade and high yield credit globally.
The impact of COVID-19 on global high yield
20 Apr 2020
As an increasing number of companies battle the economic consequences of COVID-19, their ability to service bond payments is coming under intense scrutiny. In this Q&A, Sunita Kara considers whether current high-yield valuations adequately compensate investors for default risk and looks at the broader implications of the pandemic.
Re-enter the dragon: What China’s recovery from COVID-19 means for emerging markets
7 Apr 2020
As China gradually emerges from lockdown, emerging market debt and equity investors are trying to gauge the impact of the coronavirus pandemic on its economy – and the knock-on effects for other emerging markets.
COVID-19 and a brief history of emerging market debt drawdowns
2 Apr 2020
The scale and speed of COVID-19’s impact on global financial markets has caused emerging market debt returns to decline at a pace not seen since the global financial crisis. However, history suggests the recovery of the asset class may also turn out to be quick.
The impact of COVID-19 on private debt
30 Mar 2020
As COVID-19 sweeps across the world, a contraction in global growth is causing an adverse short-term reaction to the economy and financial markets. While the extent of contagion from public markets to private debt remains unclear, transactions with strong downside protection should remain more resilient through the crisis, explains Nikhil Chandra.
Are investors too complacent about the coronavirus?
21 Feb 2020
In the latest of our editorial series, Link, AIQ brings members of Aviva Investors’ investment strategy, equity and debt teams together to discuss the prospects for financial markets and the world economy in the face of the coronavirus epidemic.
Broadening global investment-grade horizons
20 Feb 2020
UK investors considering whether to allocate to global investment-grade credit may discover the broader diversification benefits can significantly improve a portfolio’s overall risk dynamics.
Multi-asset allocation views: The pros and cons of higher-yielding fixed income
16 Jan 2020
Sunil Krishnan asks whether higher-yielding fixed income assets remain good diversifiers for multi-asset portfolios in the current environment.
Reform: A route to resilience in emerging markets?
13 Jan 2020
Following a series of IMF meetings in Washington, D.C., Carmen Altenkirch and Dariusz Kedziora discuss their views on how reform prospects may shape emerging market debt.
Climate risk for insurers
12 Dec 2019
Climate risk has become a critical business issue, but a recent consultation by the European Insurance and Occupational Pensions Authority highlights confusion on how to assess it.
Global high yield in a sub-zero world
24 Sep 2019
In the strongest signal yet that central bank policies are upending the investment playbook, sub-zero conditions are extending to the high yield market for the first time. Sunita Kara, looks at the implications for investors.
Three steps to improve the green bond market
11 Sep 2019
Green bonds can be a powerful tool for attracting investment in environmental projects, but reforms are needed to promote further growth of the market, argues Colin Purdie.
Lagarde as ECB chief – independent but integrated?
22 Aug 2019
Christine Lagarde has been nominated to head the European Central Bank at a difficult time for monetary policy given growing fears of a recession in the euro zone. Despite much debate on her credentials, Stewart Robertson argues she is the right candidate for the job.