Value Sustainable Core

Investment Objective

The Value Sustainable Core strategy seeks to outperform the benchmark by 100 basis points over a market cycle while giving special consideration to certain sustainability criteria.

Description

The strategy uses a value-driven approach and seeks to generate return by investing in a portfolio of investment grade, fixed income securities. The strategy seeks to add value by capitalizing on imbalances in the relationships among sectors and individual bonds. We believe that investing in undervalued sectors and bonds and selling expensive ones using a relative value assessment is the ideal process to capture value.

The strategy focuses on best-in-class issuers across the fixed income universe and avoids some of the issuers that are more challenged from an ESG perspective, and taking few steps to improve. In doing so, the team uses several proprietary data-driven tools to assess an issuer’s overall sustainability profile and to quantify an issuer’s social benefits and costs in economic terms. This enables the team to understand how the profitability of that issuer would be impacted if these social costs were translated into financial burdens due to either government intervention or societal pressure. We believe our overall investment approach informs our understanding of an issuer’s fair value and enhances our ability to deliver sustainable returns.

The strategy typically invests in US dollar-denominated fixed income securities including governments, corporate bonds, securitized bonds, sovereign and supranational entities, as well as municipal bonds. The strategy is duration neutral to the benchmark. It is our view that interest rate forecasting is not a reliable source of returns and thus we focus our efforts on delivering alpha through sector rotation and security selection.