Philosophy and Approach

A private credit process across public and private markets

 

Approach

 

The Fixed Income team’s investment philosophy is that taking a private approach to lending leads to better risk/return outcomes for clients across private and public markets. A private approach means underwriting credit risk as though you will own it – not trade it. It means actively sourcing new opportunities rather than waiting for a bank to call, and engaging with borrowers and arrangers directly to effect structural changes to transactions in order to mitigate downside risks and access better quality information. This approach involves having discipline in understanding and quantifying credit, liquidity, and complexity risk premia.

The Fixed income team takes a multi-strategy approach to credit investing, allowing for a broader opportunity set and avoiding sectors which are mispriced. The team adopts a relative value approach to investing such that cheapness and richness are considered in relative not absolute terms, both across sectors and for individual securities.

The Fixed Income team has been a signatory to the Principles of Responsible Investment as part of Challenger since 2015. Consideration of environmental, social and governance (ESG) factors is fully integrated into the investment process and embedded into the Fixed Income investment philosophy which emphasises strong engagement. The team believes that attractive returns can be generated by identifying ESG risk factors, engaging with borrowers to mitigate these risks and incentivising positive outcomes through structure as well as price.

For more detail on how ESG is integrated in our investment process please refer to our Responsible Investment page.