investment process

BONDS

Bonds are introduced into portfolios to reduce risk and volatility, as well as to provide for specific income requirements.

The fixed income investment process is based on expectations regarding key variables such as interest rates, interest rate volatility and yield spreads. portfolios are created with the objective of obtaining a higher relative risk adjusted return to the benchmark or to cover a specific liability stream.

The various strategies that are employed include interest rate expectation strategies that require forecasting interest rates and altering the portfolio duration accordingly and yield curve strategies that aim to capitalise on shifts in the yield curve. In addition, the individual security selection process is designed to find temporarily miss-priced securities.

When selecting securities to include in the portfolio characteristics such as credit risk, yield spreads and liquidity are considered.