The Corporate MACS strategy seeks to provide higher levels of income from a well-diversified portfolio of Investment Grade Corporate bonds and is benchmarked to the Bloomberg Barclay’s Corporate Bond Index. The strategy may also opportunistically invest a small portion of the portfolio in Convertible Bonds to take advantage of opportunities in the asset class.
We intend to exploit periodic inefficiencies in the corporate bond market by risk-adjusting various sectors, utilizing yield curve and sector analysis, and combining that with fundamental research to produce a well-diversified portfolio of corporate securities that provides attractive risk-adjusted yield while emphasizing risk management at both a sector and security level, given the asymmetric return potential in corporate bonds.
PIA’s corporate bond investment process seeks to identify attractive corporate securities that exhibit strong balance sheets and cash flows in order to minimize the downside potential in an adverse market while offering above average risk-adjusted yields in undervalued sectors.
- PIA deconstructs the investment grade corporate bond market into yield curve, quality and industry sectors and utilizes quantitative tools to identify sectors that are undervalued on a risk-adjusted basis.
- We combine fundamental top-down industry analysis with bottom-up fundamental security and ratio analysis to select investment grade credit securities that offer attractive yields given the security’s risk profile.
- Portfolio managers construct portfolios consistent with the investment strategy set forth by the firm’s Macro Strategy Group, which utilizes macroeconomic inputs (both quantitative and fundamental) to develop sector weightings, yield curve positioning and duration management.
- Position sizes are limited to 5% of the portfolio at purchase to diversify away security specific risks, and the strategy will utilize the PIA BBB completion strategy to further provide diversification and liquidity within the portfolio.
- Risk measurement is an integral component to evaluating corporate securities so that the portfolio is not biased towards lower quality credit sectors.