Investment Philosophy

Consistency

We aim to deliver targeted results consistently. To achieve consistency we strive to take the right decisions through the right processes.

We apply an investment process developed over an extended period, complemented by independent thinking and bespoke models. The combination helps us identify suitable investment opportunities to achieve our investment objectives.

Reward vs Risk

We are constantly looking for the best reward in relation to risk presented across asset classes, countries, and financial instruments.

A question we constantly ask ourselves is whether uncertainty is sufficiently priced in by markets. We evaluate the uncertainty that the markets face and compare it with what is priced in.

Our Reward vs Risk analysis enables us to assess the Absolute Value and Relative Value of investment opportunities.

Absolute and Relative Value

We search for investments that offer both Absolute Value and Relative Value.

With markets complex and interconnected, there are many layers and angles for analysis.

Our investment approach involves analysing the global economy and financial markets from the top-down, and individual countries from the bottom-up. 

We compare the value offered by major asset classes in developed markets - from US Treasuries to Equities - to the value offered by our asset class - Emerging Markets bonds.

And within emerging markets, recognising that each country is distinctly different from another, we add our thorough (bottom-up) understanding of each country, and assess the absolute and relative reward vs risk in the financial instruments available for investment.

Target Return vs Market Return 

Through a combination of qualitative assessment and the output from our proprietary sovereign credit model, we determine the Target Return and expected Market Return for each bond. 

We search for bonds with sufficiently high Target Return and/or adequate Market Return for the risk, for possible inclusion in the portfolio.

Prices and Supply & Demand

Considering that the prices for financial assets are driven by the forces of supply and demand for these assets, an analysis of these drivers is a key element in our investment approach.

Results of our Investment Philosophy

Our Investment Philosophy is employed in the management of the Blue Diagonal EM Fixed Income Fund.

Our investment philosophy and methodology has delivered consistent outperformance vs the benchmark (JP Morgan EMBI Global Diversified / iShares J.P. Morgan USD Emerging Markets Bond ETF), irrespective of market direction:

• The Fund has beaten the benchmark ETF in every calendar year (5 years) since inception, and is also doing so in 2023
• The Fund has beaten the benchmark ETF in 77% of all quarters (17/22 quarters):
  • 80% when the benchmark was down (8/10)
  • 75% when the benchmark was up (9/12)
• The Fund has achieved an Alpha of 295bp per annum vs the benchmark
   

Please see below the latest performance report 

Performance Analysis Report - 31 August 2023