Strategien
Rentenfonds
US Investment Grade Corporate Strategy
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US Investment Grade Corporate Strategy |
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Strategien
Rentenfonds
US Investment Grade Corporate Strategy
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US Investment Grade Corporate Strategy
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The team believes that market participants may often under or overvalue a company’s default risk, resulting in bond prices that fail to reflect the true credit profile of a company. However, the team believes that the market, over time, will re-value the bond prices of high-quality issuers based on an improving credit profile, thereby offering investors in undervalued, high-quality issuers, the opportunity to potentially exploit these pricing inefficiencies and earn superior returns over the long term.
The team believes that successful credit management depends on four factors:
- A value-driven process
- Forward-looking credit analysis
- Broad diversification in an attempt to reduce portfolio risk
- A global approach
Customization |
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The team delivers fixed income expertise in a customized, solutions-based approach that optimizes the application of the team's global resources to the investment objectives of the individual client. The team is client-centric in all aspects of the relationship. |
Right-Sized |
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As a mid-sized asset manager, the team has the depth and breadth of resources to provide our clients with options ranging from highly customized strategies to standardized fund options. The team benefits from a collaborative structure based on small team of sector specialists enabling the team to confidently implement investment themes across portfolios. |
Extensive Resources of a Global Firm |
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MSIM has a cohesive team of fixed income specialists in New York, London, Singapore and Tokyo who can identify opportunities to capture returns in all major markets worldwide. They bring together an impressive range of market experience, intellectual rigour and academic achievements. |
Intensive Risk Management |
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At the strategy level, the team integrates daily monitoring that helps ensure compliance with guidelines and quantifies portfolio risk exposures. At the firm level, the risk management team operates independently of the business functions. |
| 1 | Macro analysis: |
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To determine the optimal beta positioning of the portfolio, the process begins with a top-down value assessment of the corporate bond universe, including a consideration of macroeconomic conditions, the corporate earnings environment and relative valuations. The team examines swap spreads as a proxy for the liquidity premium embedded within corporate spreads, and assesses factors such as leverage and asset volatility (which drive both equity volatility and default spreads) as an indicator of future default expectations. |
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| 2 | Screening: |
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The team uses quantitative tools and signals to complement their fundamental research and enhance their process. An example of this is the use of Moody’s Credit Edge, an industry leading Merton-based structural model. The output offers the ability to to screen and compare credits, model events and monitor portfolio risk. |
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| 3 | Credit analysis: |
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The team focuses on financial risk, business risk and management ability/intentions. When analyzing business risk, the team assesses a company’s competitive position, its diversification and growth potential, the value of its franchise, and the flexibility of its business model in terms of the variability of its cost structure. Financial risk involves an examination of a company’s financial statements to assess the suitability of the company’s capital structure for the risk entailed in its business. The group also seeks to understand management’s intentions, in terms of business development and capital structure, and ability to execute. |
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| 4 | Valuation analysis: |
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The team’s credit analysis narrows the universe to approximately 200 to 300 investment candidates on which a relative valuation assessment is conducted. The team derives a "fair value" spread for each bond that is compared to the market spread to determine a bond’s under- or over-valuation. |
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| 5 | Portfolio construction: |
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A portfolio of 100 to 150 issuers is constructed, with sector allocation driven primarily from bottom-up security selection (subject to risk management guidelines). Integral to the team’s portfolio construction process is the measurement and monitoring of market risk, duration and volatility, and credit risk through the use of proprietary risk measures (i.e., Distance to Default) and proprietary models. The team actively manages spread duration with a target range of +/- two years versus the benchmark, with portfolio duration targeted at +/- one year around the benchmark. |
Effective July 31, 2022, Stella Ma was added as portfolio manager on the Strategy.