At the heart of our corporates investment process is our approach to credit analysis. We combine fundamental credit analysis with quantitative analysis, an environmental, social and governance (ESG) analysis and an assessment of the quality of information provided. This methodology enables us to track how the risks in a corporate issuer are changing and has been behind our track record of not having an investment grade issuer default in our corporate emerging markets portfolios since inception in 1999 (as at 31 January 2018).
A cornerstone of our investment style is the aim to protect on the downside. We achieve this through the ability to adjust the risk profile of the portfolio according to the current market circumstances. This implies that at times we will forego yield by investing in more liquid instruments (liquidity premium). We do so across countries and within country curves (yields or interest rates across different fixed income contract lengths). This feature of our investment style has played a key role over the past few years, as market liquidity has steadily been declining ever since the global financial crisis, when investment banks’ balance sheets became constrained (as at 31 January 2018).