Global Credit Strategy
Global Credit Strategy

Global Credit Strategy

 
 
 
Summary

The Global Credit Strategy seeks attractive total returns from income and price appreciation by investing in a globally diversified portfolio of multi-currency debt issued by corporations and non-government issuers. To help achieve this objective, the strategy combines a top-down macroeconomic assessment, to determine optimal beta positioning for the portfolio, with rigorous bottom-up fundamental analysis.

+/-10%
Benchmark Security Weight
<5%
Single Issuer
100-120
Typical Number of Holdings
 
 
Investment Approach
Philosophy

The investment team believes that market participants may often mis-value a company’s default risk, resulting in bond prices that fail to reflect the true credit profile of a company. However, they believe that the market, over time, will re-value the bond prices of issuers based on an improving credit profile, thereby offering investors in undervalued issuers the opportunity to potentially exploit these pricing inefficiencies and earn superior returns over the long term. The team believes that successful credit management depends on four factors:

  • A value-driven process
  • Forward-looking credit analysis
  • Broad diversification to help reduce portfolio risk
  • A global approach
 
Differentiators
Customization

The team delivers fixed income expertise in a customized, solutions-based approach that optimizes the application of the team's global resources to the investment objectives of the individual client. The team is client-centric in all aspects of the relationship.

Right-Sized

As a mid-sized asset manager, the team has the depth and breadth of resources to provide our clients with options ranging from highly customized strategies to standardized fund options. The team benefits from a collaborative structure based on small team of sector specialists enabling the team to confidently implement investment themes across portfolios. 

Extensive Resources of a Global Firm

Morgan Stanley Investment Management has a cohesive team of fixed income specialists in New York, London, Singapore and Tokyo who can identify opportunities to capture returns in all major markets worldwide. They bring together an impressive range of market experience, intellectual rigour and academic achievements.

Intensive Risk Management

At the strategy level, the team integrates daily monitoring that ensures compliance with guidelines and quantifies portfolio risk exposures.  At the firm level, the risk management team operates independently of the business functions.

 
 
 
Investment Process
1
Macro analysis:

The process begins with a top-down value assessment of the corporate bond universe, including a consideration of macroeconomic conditions, the corporate earnings environment and relative valuations. The team examines swap spreads as a proxy for the liquidity premium embedded within corporate spreads, and assesses factors such as leverage and asset volatility (which drive both equity volatility and default spreads) as an indicator of future default expectations.

2
Screening:

The team uses quantitative tools and signals to complement their fundamental research and enhance their process. An example of this is the use of Moody’s Credit Edge, an industry leading Merton-based structural model. The output offers the ability to to screen and compare credits, model events and monitor portfolio risk.

3
Credit analysis:

The team focuses on financial risk, business risk and management ability/intentions. When analyzing business risk, the team assesses a company’s competitive position, its diversification and growth potential, the value of its franchise and the flexibility of its business model in terms of the variability of its cost structure. Financial risk involves an examination of a company’s financial statements to assess the suitability of the company’s capital structure for the risk entailed in its business. The team’s forward-looking proprietary cash flow models enable them to understand the likely future financial profile. The group also seeks to understand management’s intentions, in terms of business development and capital structure, and ability to execute.

4
Valuation analysis:

The team’s credit analysis narrows the universe to approximately 200 to 300 investment candidates on which a relative valuation assessment is conducted. They derive a "fair value" spread for each bond that is compared to the market spread to determine a bond’s under/overvaluation.

5
Portfolio construction:

A portfolio of 100 to 120 issuers is constructed, with sector allocation driven primarily from bottom-up security selection (subject to the team’s risk management guidelines). Integral to their portfolio construction process is the measurement and monitoring of market risk, duration and volatility, and credit risk through the use of proprietary risk measures and proprietary models. The team actively manages spread duration with a target range of +/- two years versus the benchmark, with portfolio duration targeted at +/- one year around the benchmark.

 
 
Portfolio Managers
Managing Director
31 years industry experience
Managing Director
27 years industry experience
Managing Director
16 years industry experience
 
 
Insights
Global Fixed Income Bulletin
A Bumpy Ride
Jun 15, 2018
The Global Fixed Income team discusses how May was a schizophrenic month for financial markets, with both bouts of "risk on" and "risk off", and how they expect the high volatility to continue.
Global Fixed Income Bulletin
Ranges Are Meant to be Broken
May 11, 2018
The Global Fixed Income team discusses how we may have seen markets settle in a range in April, but that new economic data (better or worse) could force the market to change its expectations.
 
 
 
 

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リスクについて

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