How we invest

We base our investment approach on our Focus on Change philosophy, which recognises that different factors drive markets at different times in the investment cycle. It is not inherently growth or value biased or necessarily momentum driven. This means that we have an opportunity to outperform throughout the cycle.

Our Focus on Change investment philosophy seeks to identify and understand the most important factors that drive the market price of an investment and the dynamics behind these drivers. This focus is supplemented by analysis of what is priced into an investment - what are the key drivers of the price and what expectations for these drivers are currently priced in. We then focus on what's changing and whether these changes will lead to revised market expectations and hence to a revised price.

One of the key tools we have developed to monitor credit quality is our proprietary credit scoring model, the Credit Matrix. It plays a crucial role in prioritising our research agenda by highlighting stocks that may require deeper analysis. In practice, the Credit Matrix has been helpful in the early identification of companies that have subsequently experienced significant financial difficulties.

The final stage of our process is deciding which holdings to choose. This decision is based on macroeconomic trends and the portfolio managers' fundamental analysis of bonds and the companies and governments that issue them. In all cases, we seek to build well-diversified portfolios that can harvest the benefits of our investment insights.