Open Category List

Clients are asking details on the investment process we follow and if we apply an initial screen based on yield.

  • Home
  • /
  • January 2020
  • /
  • Clients are asking details on the investment process we follow and if we apply an initial screen based on yield.

Context:Understanding the four steps investment process and how we evaluate the holdings we invest in

Impact for the fund:The investment philosophy of Atlanticomnium in the process leading to the investment decisions

When analyzing potential investment ideas, we conduct a detailed process to ensure that the potential bond fits our strict criteria

This starts with detailed analysis of the issuer (analysis of financial statements, meeting with senior management, etc.) to identify conviction issuers that are consistent with our investment philosophy of capturing high income from bonds of very high-quality issuers. Once we have identified high-quality issuers that fit our criteria, we analyze the instrument itself (understanding the capital structure, term and conditions of the bonds, regulation etc.) to understand the potential upside and downside risk and the attractiveness of the bond structure. When we have identified the attractive bond(s) of high conviction issuers, we then look at valuations to ensure that the bonds add value to the portfolio. We look at a range of indicators such as yields, spreads, potential for price appreciation, volatility. We do not have a pre-defined yield or spread level under which we do not invest, as this depends on market conditions (level of interest rates, spread levels in the market, etc.). However, we will only make investments that make sense in our portfolio context, following the investment philosophy of capturing high income in high quality issuers.

Finally, we constantly review the portfolio, adding issues that complement the existing holdings, based on relative value and on a risk-adjusted basis. We consider the management of credit risk to be of prime importance. The rigorous bottom-up approach to choosing companies and issues in which to invest embodies very careful consideration of both the return potential and risk of each credit investment throughout the investment process. To this end, the fund managers closely monitor daily changes in:

– Average credit rating across each fund
– Individual credit ratings and how they influence investor behavior
– Prices of both the bonds and their related stocks
– Relative positions between similar instruments and ratings
– Liquidity across each fund and of individual positions
We maintain a strong focus on liquidity throughout the investment process, with the majority of
holdings within the portfolio typically classified as very liquid or liquid. Liquidity risk is further mitigated by diversification across a large number of positions of different types such as fixed, fixed to floating, floating
senior, junior, higher coupon and lower coupon bonds which each behave differently from one another
with the aim to always own some holdings that will be attractive to buyers at different times and in different market environments. Furthermore, the investment team monitors daily liquidity changes closely across the funds as a whole and of the individual underlying positions.
  • Please read this important legal information before proceeding.

    Information contained herein are solely for the use of the person who has accessed this information and may not be reproduced or distributed, even partially, to any other person or entity.

    The material contained herein is confidential and intended solely for the use of the persons or entities with nationality of or respectively with their residence, domicile, registered office or effective administration in a State or Country in which distribution, publication, making available or use of the information is not contrary to applicable laws or any other regulation.

    The material contained herein is aimed at sophisticated, professional, eligible, institutional and/or qualified investors/intermediaries who have the knowledge and financial sophistication to understand and bear the risks associated with the investments described.

    The information is solely product-related and does not take into account any personal circumstances and does not qualify as general or personal investment recommendation or advice. In particular, the information is given by way of information only and does not constitute a specific legal offer for the purchase or sale of financial instruments. Moreover, nothing contained herein is constitutive of any tax advice.

    Every effort has been made to ensure the accuracy of the financial information herein but the information contained herein has not been independently reviewed or verified. Therefore, Atlanticomnium SA gives no assurance, express or implied, as to whether such information is accurate, true or complete and no responsibility is accepted by Atlanticomnium SA for any errors or omissions. Third-party content is the property of its respective provider or its licensor and is protected by applicable copyright law.

    Past performance is not indicative of future performance. The price of shares/units and the income from the funds/trusts can go down as well as up and may be affected by changes in rates of exchange or financial markets fluctuation, out of the scope of Atlanticomnium SA.

    To the fullest extent permitted by law, in no event shall Atlanticomnium SA or our affiliates, or any of our directors, employees, contractors, service providers or agents have any liability whatsoever to any person for any direct or indirect loss, liability, cost, claim, expense or damage of any kind, whether in contract or in tort, including negligence, or otherwise, arising out of or related to the use of the information provided.