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Do you use any form of quantitative analysis (e.g. screening, fundamental analysis etc.)?

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  • Do you use any form of quantitative analysis (e.g. screening, fundamental analysis etc.)?

Quantitative screening is applied to the broad market to identify bonds with a minimum acceptable income
return or potential capital gain. This helps to narrow the universe onto which the team applies their highly
qualitative credit analysis process which encompasses understanding the overall market environme

monitors the market backdrop and sets ranges for interest rate expectations and inflation over the medium
term, against which they monitor developments in order to provide a general framework for investments.
The credit and bond analysis aspects of the team’s research tend to be complementary and combine with
quantitative and qualitative elements to provide an integrated overview of the attractiveness of potential
investments.

 

 

Both qualitative and quantitative factors are equally important; for example, strong cash flow generation
impacts a company’s ability to pay whilst good governance influences the company’s willingness to pay.
When assessing companies, the investment team applies an equity analyst mindset to determine the
franchise value i.e. the ‘margin of safety’. They look at the balance sheet, income statement, cash flow
statement, management, industry, competition, pricing power, cost structure, tangible assets of
companies and then target the one with good prospects. Additional key considerations are: recovery
value, enterprise value, risks analysis, identification of credit triggers, enterprise momentum, the
(company’s ability to ride out weaker markets (‘e.g. not selling divisions or cutting dividend, etc.) and
macroeconomic backdrop supportive to the issue.

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