Risk Management

Our philosophy is based on exploiting inefficiencies across credit markets that develop for several reasons. First, ratings agencies are slow to act and narrow in their methodology. Next, investors focus on benchmarks rather than more appropriate measures of risk. Finally, behavioral biases like overconfidence, herd behavior, clientele effects, and regret lead investors to make sub-optimal investment decisions.

Based on these beliefs, we believe consistent, long-term outperformance can be generated by combining the following:

  1. Responsive and broad bottom-up fundamental credit research (integrated through the Investment Opinion Network, our proprietary system which evaluates the decisions of investors globally to help identify new sources of risk and return)
  2. Portfolio construction that acknowledges all the key drivers of risk into a portfolio, looking to balance returns with tail risk
  3. Either a benchmark-unaware approach that creates a flexible but complete universe, or an index that reflects the client’s true risk profile/liabilities