A global approach to corporate bond investment

A truly global approach to corporate bond investing

Lyndon Man. Co-Head of Global Investment Grade Credit

The Invesco Global Investment Grade Corporate Bond Strategy offers a globally diversified approach to investment grade corporate bond investing. Invesco Fixed Income’s truly global approach increases the opportunity set available versus a regional focused strategy, with the goal of delivering better risk-adjusted returns more consistently and to achieve income and long-term capital growth.

Our approach builds on traditional corporate bond investing through the implementation of a theme-based investment philosophy, the use of macro overlays and ability to reduce idiosyncratic risk exposure in our strategy. Whilst within the strategy, we are able to offer full environmental, social and governance integration and if desired a rigorous ESG framework to guide active investments in corporate bonds issued by companies worldwide.

The monthly update on the Invesco Global Investment Grade Corporate Bond strategy:

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Our Approach

Traditional active corporate bond managers typically rely on a combination of security selection and market timing to outperform the market. There are three additional key components embedded in the philosophy of Invesco Fixed Income’s (IFI) approach to global corporate bond management that when combined, we believe can result in better risk adjusted returns when compared to more traditional approaches.

These three additional key components are:

  • Thematic Approach - The team implements strategic medium- to long-term investment themes, these are populated using security selection.
  • Relative Value - The team constructs these investment themes using a relative value approach versus the benchmark across key thematic risk factors (regions, sectors, currency of the bonds, credit curve term structure and capital structure).
  • Macro Overlays - the team use liquid derivatives to try and reduce downside capture during periods of corporate bond weakness. These macro overlays are modulated to varying degrees depending on the risks identified. The goal is to more efficiently manage the portfolio risk, thus reducing transaction costs.

Investment risks

  • The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.

     

    Debt instruments are exposed to credit risk which is the ability of the borrower to repay the interest and capital on the redemption date. The strategy may use derivatives (complex instruments) in an attempt to reduce the overall risk of its investments, reduce the costs of investing and/or generate additional capital or income, although this may not be achieved. The use of such complex instruments may result in greater fluctuations of the value of a portfolio. The Manager, however, will ensure that the use of derivatives does not materially alter the overall risk profile of the strategy. Investments in debt instruments which are of lower credit quality may result in large fluctuations in value.

     

    As this strategy is invested in a particular sector, you should be prepared to accept greater fluctuations of the value than for a strategy with a broader investment mandate.

     

    Changes in interest rates will result in fluctuations in value.

     

    The strategy may invest in contingent convertible bonds which may result in significant risk of capital loss based on certain trigger events.

     

    Investment in certain securities listed in China can involve significant regulatory constraints that may affect liquidity and/or investment performance.

Important information

  • Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

     

    This marketing communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell securities.