Fixed-income managers need to break away from traditional strategies and operate more quickly and consistently when implementing investment strategies. More flexibility is becoming essential.
Head of Portfolio Management Fixed Income
Union Investment is one of the leading fixed income managers in Europe, with € 166.6 billion in assets under management (as of 30 September 2018) and expertise across a broad range of sub-asset classes.
We firmly believe that markets are not fully information efficient and that distortions may be caused by different perceptions of credit quality or by technical factors. It is our conviction that only a combination of fundamental research and active portfolio management enables us to spot these inefficiencies and to exploit them profitably. In doing so, it is essential not only to actively manage a portfolio´s assets, but even more important to actively manage all related risks.
Our fixed income portfolio management is organised by sub-asset classes, with each portfolio manager specialising in specific regions or sectors. We believe that research and performance responsibilities cannot be separated and every specialist in a specific region or market segment also functions as a portfolio manager. It is this dual role that enables us to benefit from short communication channels and efficient decision-making processes.
Union Investment has particular expertise in corporates (including structured credit, subordinated bonds and CoCo bonds), emerging market debt, covered bonds and money markets.
The corporate-bond team attaches particular importance to disciplined and process-driven implementation of investment decisions. Whether qualitative or quantitative criteria are given priority depends on the market environment.
Head of Credits
The investment process in the area of corporate bonds systematically and consistently aims to outperform a fund's benchmark without incurring greater risk than the benchmark. The weighting of individual industries and sectors in corporate-bond portfolios is the result of controlled deviations from the benchmark. Union Investment sets up a team that is customer-focused and specialises in different sectors in line with the corporate bonds in the portfolios. The team members are responsible for both research and portfolio management.
Subordinated bonds offer attractive yield premiums – but a close look at issuers, structure and liquidity is absolutely vital in this market segment.
Head of Corporate Bond Team Financials
The usual investment-grade indices only include a limited number of subordinated bonds, which is why they are not on the radar for all investors. Because they are frequently also complex in structure and the market segment is not very liquid, subordinated bonds make it possible to earn attractive yield premiums. Regulatory requirements also support this segment. Their higher yields provide a larger buffer should interest rates rise, which means that they generate positive returns for a longer period.
Structured credits provide investors with three attractive features: return, diversification and transparency.
Head of Credit Solutions
Because they offer variable yields, have short durations and are collateralised by highly diversified portfolios, structured credits can be alternative investments that mitigate risk. They provide an attractive yield premium and their correlation with conventional markets is extremely low. Loss rates, particularly on European structured credits, have been minimal despite the temporary financial crisis, and have been significantly lower than those on investment-grade corporate bonds.