Get the benefits of a long-term, strategic allocation to global credit
There are many opportunities for both structural and tactical allocations to global credit, ranging from passive/smart-beta portfolios (adjusting an index exposure to consider factors such as liquidity and volatility) to fully active global credit and multi-sector strategies. Although investors may allocate opportunistically to global credit based on short-term market dislocations, we also offer longer-term, strategic allocations that may be desirable in light of private sector deleveraging, increased regulation and rising government debt levels. Corporate credit remains attractive to investors seeking a higher yield than cash and government bonds, while retaining more defensive characteristics compared to equities. Higher-quality global credit securities are currently being supported by the typically low yields available from cash and government bonds, combined with continued central bank accommodation.
We exploit market inefficiencies with the aim of improving risk-adjusted returns
We believe that credit markets have an asymmetric nature (limited upside and the potential for100% downside), which combined with other factors, leads to inefficiencies across credit markets. To manage the risks and take advantage of these inefficiencies, our credit portfolios are well diversified. They are constructed on the foundation of expert multi-dimensional credit research combined with sophisticated portfolio design. It is via this process that we can help deliver risk-adjusted returns to investors in line with their desired outcomes.
Our multi-dimensional credit research helps reduce the impact of defaults
We believe fundamental credit research and active security selection are required to identify the most compelling risk-adjusted opportunities in corporate credit. Our credit analysts assess the risk associated with a borrower and the securities they issue. They conduct financial analysis, review positioning and strategy, conduct industry analysis, consider the opinions of the ratings agencies and review all relevant market-based research. At the heart of our credit research process is our proprietary system, ION, which provides insight into the actions of fixed-income investors in developing and emerging markets to identify risks and new and diverse sources of excess returns.
ESG factored in
Our independent ESG analysis uncovers more financial risks
We have a vigorous environmental, social and governance (ESG) process that is built in at both the company and product level. ESG plays a key role in our security analysis process for our global credit portfolios. By analysing and assessing ESG issues within a company, we can identify sources of unrecognised financial risk. We are able to identify companies with a higher default risk than the balance sheet implies. This gives us greater insight into issuers than relying on ratings from the traditional credit agencies.
Headed by Tony Togher (over 30 years’ industry experience), our Short-Term Investments and Global Credit team is supported by our global credit research analyst community. For nearly 20 years, the team has delivered actively managed credit portfolios, spanning both investment-grade and high-yield corporate credit markets. This time-tested approach has been successfully applied through a variety of market cycles and conditions.
Our corporate RI strategy is based upon three strategic pillars of quality, stewardship and engagement.
For Global Credit, the Environmental, Social and Governance (ESG) assessment most often comes through its impact on the internal credit rating (ICR) provided by the Credit Analysts via our Credit Research process. Learn more about the Global Credit team's approach to Responsible Investment.