Go­ing beyond the or­di­nary

iA Clar­ing­ton part­ners with PineBridge In­vest­ments LLC for a new ap­proach to in­come

Investment Executive - - BYB -

For more than 30 years, in­come-seek­ing Cana­dian in­vestors en­joyed what seemed like the best of all worlds. One of the most reliable sources of in­vest­ment QVKWUM · +IVILQIV OW^MZVUMV\ JWVL[ · ML at­trac­tively high yields, as well as price ap­pre­ci­a­tion from steadily fall­ing in­ter­est rates. It wasn’t so long ago that Cana­dian in­vestors earned what by to­day’s stan­dards are equity-like to­tal re­turns from in­vest­ment grade gov­ern­ment bonds. In­vestors to­day face an al­to­gether new real­ity: Cana­dian gov­ern­ment bond yields are near his­toric TW_[ IVL _Q\P QV\MZM[\ ZI\M[ IVL QVÆI\QWV ZQ[QVO \PM[M “It’s a uniquely chal­leng­ing set of cir­cum­stances, and our goal has been to de­velop so­lu­tions that meet the press­ing in­vestor need for in­come in a world where tra­di­tional sources may no longer be ad­e­quate,” says Eric Frape, Se­nior Vice-Pres­i­dent, Prod­uct & In­vest­ments, iA Clar­ing­ton In­vest­ments. “This is why we’ve part­nered with PineBridge In­vest­ments LLC \W 1) +TIZQVO\WV /TWJIT *WVL .]VL IVL IA Clar­ing­ton Emerg­ing Mar­kets Bond Fund.” Head­quar­tered in New York, PineBridge In­vest­ments is an ac­tive, high-con­vic­tion global as­set man­ager with more than US$85 bil­lion in AUM. 1 One of the key reasons iA Clar­ing­ton chose PineBridge In­vest­ments is \PM ÅZU¼[ KWUXZMPMV[Q^M OTWJIT NWW\XZQV\ _Q\P UWZM than 200 in­vest­ment pro­fes­sion­als in 17 coun­tries. 1 “While it’s pos­si­ble to man­age a global or emerg­ing mar­ket bond fund from Toronto or New York, our view is that global in­vest­ing is en­hanced when you have the local knowl­edge and relationships that PineBridge has spent so many years cul­ti­vat­ing,” says Frape. “Our local pres­ence pro­vides lan­guage, re­la­tion­ship and cul­tural ad­van­tages, as well as the op­por­tu­nity for mean­ing­ful in­for­ma­tion ex­change across teams,” [Ia[ 5QKPIMT 2 3MTTa 5IVIOQVO ,QZMK\WZ IVL /TWJIT Head of Multi-As­set, PineBridge In­vest­ments. “We believe the breadth and depth of our global reach is un­par­al­leled in as­set man­age­ment.”

Fo­cus on fi`ed in­come

PineBridge’s ex­per­tise cov­ers the full spec­trum of as­set KTI[[M[ NZWU MY]Q\QM[ \W Å`ML QVKWUM \W IT\MZVI\Q^M QV^M[\UMV\[ <PM ÅZU PI[ LMMX JMVKP [\ZMVO\P QV OTWJIT IVL MUMZOQVO UIZSM\ Å`ML QVKWUM _Q\P UWZM \PIV =; JQTTQWV WN \PM ÅZU¼[ )=51 and 87 of its in­vest­ment pro­fes­sion­als1 fo­cused on de­liv­er­ing in­no­va­tive in­come so­lu­tions to both in­sti­tu­tional and re­tail clients. *W\P 1) +TIZQVO\WV /TWJIT *WVL .]VL IVL 1) Clar­ing­ton Emerg­ing Mar­kets Bond Fund are man­aged us­ing a dy­namic, re­search-in­ten­sive in­vest­ment process that com­bines top-down2 macroe­co­nomic analysis with bot­tom-up2 credit analysis.

IA Clar­ing­ton Global Bond Fund

<PM 1) +TIZQVO\WV /TWJIT *WVL .]VL [ IKKM[[ \W \PM MV\QZM OTWJIT Å`ML QVKWUM ]VQ^MZ[M _PQKP \ZIV[TI\M[ into po­ten­tial for higher yields and re­duced ex­po­sure to in­ter­est rate risk. 2 “We use an un­con­strained ap­proach, which means there is no min­i­mum or max­i­mum al­lo­ca­tion for any re­gion or as­set class,” says Kelly. “Our al­lo­ca­tions are driven by what our rig­or­ous process sug­gests are the re­gions, as­set classes and in­di­vid­ual se­cu­ri­ties most likely to bring in­vestors the best out­comes.” The Fund’s in­vest­ment strat­egy is based on an in­ter­me­di­ate time hori­zon. “We believe that an ap­proach that’s ex­clu­sively strate­gic or tac­ti­cal is not op­ti­mized to meet in­vestor needs,” says Steven Oh, 5IVIOQVO ,QZMK\WZ /TWJIT 0MIL WN +ZMLQ\ IVL .Q`ML In­come and Co-Head of Lever­aged Fi­nance, PineBridge In­vest­ments. “A purely tac­ti­cal time hori­zon – one to three months – is too short for prices to con­verge with fundamentals, 2 while a purely strate­gic ap­proach of 10+ years asks in­vestors to tol­er­ate too many down mar­kets in search of a long-term re­sult. We believe a nine- to 18-month time hori­zon is long enough for prices and fundamentals to con­verge and also matches most client needs and ob­jec­tives.”

IA Clar­ing­ton Emerg­ing Mar­kets Bond Fund

The IA Clar­ing­ton Emerg­ing Mar­kets Bond Fund aims to pro­vide in­vestors with the op­ti­mal al­lo­ca­tion \W \PM \PZMM UIQV MUMZOQVO UIZSM\ Å`ML QVKWUM as­set classes: hard cur­rency sov­er­eign bonds, 2 local cur­rency sov­er­eign bonds2 and cor­po­rate bonds. 2 “Emerg­ing mar­ket debt rep­re­sents a US$16-tril­lion op­por­tu­nity that spans more than 70 coun­tries,” says An­ders Faerge­mann, Man­ag­ing Di­rec­tor, Se­nior Sov­er­eign Port­fo­lio Man­ager for Emerg­ing Mar­kets Fixed In­come, PineBridge In­vest­ments. “For in­vestors seek­ing po­ten­tial for en­hanced in­come streams, an ac­tively man­aged, risk-con­scious port­fo­lio of emerg­ing mar­ket debt is an ex­cel­lent so­lu­tion.” Emerg­ing mar­ket debt is par­tic­u­larly at­trac­tive in the cur­rent en­vi­ron­ment of U.S. Federal Re­serve mone­tary pol­icy nor­mal­iza­tion. 2 “Our re­search has shown that when the Fed raises in­ter­est rates grad­u­ally, emerg­ing UIZSM\ LMJ\ \MVL[ \W W]\XMZNWZU W\PMZ Å`ML QVKWUM as­set classes,” says Faerge­mann.

Emerg­ing mar­ket debt out­per­forms amid Fed rate hikes

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