Fixed income

Pictet Asset Management is a specialist in fixed income portfolio management.

Global / Regional Bonds

A cohesive team of professionalsOur fixed income team of more than 30 managers and analysts has been carefully built over the past ten years. Our aim is always to attract professionals with complementary skills while ensuring cohesion, discipline and adherence to a structured investment process. The team’s senior members have an average of twelve years investment experience.

Exploiting mispricings, allocating risk budgets and controlling riskWe aim to identify and exploit mispricings in fixed income markets. We diversify risks across a number of fixed income strategies, each with moderate risk contributions. We allocate a risk budget across portfolios, using a standard measure which is scaled in accordance with the client’s risk appetite. Each strategy has a stop-loss and a profit target. Our team specialists, assigned to a risk dimension, add further value using their extensive market experience.

Wide ranging skills applied to a wide range of mandatesOur team comprises specialists in four areas of expertise: global/regional bonds, including European bonds and Swiss bonds, money markets, credit, emerging debt and currencies. We manage accounts with both relative and absolute return objectives. In addition, our dedicated Fixed Income trading desk is split along the same four lines to further capitalise on specialist expertise.

Mandate types to match our client's needsAs well as segregated mandates to suit our clients specific investment needs, we also offer a wide range of mutual funds for institutional and private clients. For more information about these funds, please visit our fund center.

Global / Regional Bonds

Pictet Asset Management's investment philosophy and process for global and regional bond portfolios is based on three distinct principles: diversification, risk management and a team-based approach.

Our investment process exploits multiple sources of added-value and aims at delivering stable returns. We begin with a top down assessment drawing on proprietary models assessing macro fundamentals by monitoring economic cycles and investment themes.

Valuation (through fair value models, carry and roll-down analysis), market sentiment (through risk aversion indicators), and technicals (through momentum, flows, positioning, and technical analysis) complete the macro-economic fundamental picture to establish the judgemental active positioning versus the benchmark.

We intend to add value through rigorous implementation of our process output, both in terms of adequate diversification of the risk budget between allocation and overlay positions, and a disciplined strategy of stop loss and profit taking.

We demonstrate flexibility in the implementation of our strategy consistently across all portfolios in accordance with their specific risk guidelines, and we manage market risks within a strict analytical framework.

Our main global and regional bond products include European bonds, global bonds and US bonds.

Swiss Bonds

We manage Swiss bonds with both an active and passive approach. Duration, sector, rating and issuer domicile are carefully analysed using a multidimensional risk matrix.

All positions are continuously monitored by an experienced team dedicated to Swiss bond management.

Emerging Debt

Emerging economies have evolved remarkably and a combination of inflation targeting and floating exchange rates has transformed the domestic capital markets.

We employ a dedicated, well resourced and experienced team, which uses a proprietary investment approach, separating the sources of performance into two distinct elements: interest rates and currencies. Developed bond market experience is also incorporated into our thinking through an assessment of the top down global risk environment and this top down view when combined with our bottom up country analysis provides a powerful platform from which to make investment decisions. We manage portfolios in both hard and local currency.

To focus the team, two key decisions were taken:

1) structure the risk takers as regional specialists rather than instrument specialists, reflecting our belief that expertise across all instruments – USD debt, local debt, and currencies – enhances the knowledge required to trade each market successfully; and

2) require that all Asian specialists (two investment managers, one credit analyst and one trader) be based in Singapore in order to overcome the barriers to investing in Asia, namely the time difference and market idiosyncrasies.

Credit

Credit includes both investment grade corporate bond and high yield portfolios.

Corporate Bonds We first examine the credit cycle of companies: are they in a leveraging or de-leveraging trend and why? Rising leverage in times of growing revenues and margins is a positive indicator, in slowing conditions its is a concern.

Secondly, we analyse the rating cycle to determine whether conditions favour upgrades, downgrades, or a change in the default rates.

Finally, equity valuations and volatility are critical in deciding allocations between government bonds and credit, since credit is a claim on an issuer’s assets and cashflow.

High Yield High yield falls into three broad groups: leveraged buyouts and "good" high yields, fallen angels, or blue chip companies whose credit ratings have deteriorated, and distressed debt.

Our way of investing in High yield is predominantly bottom-up and we therefore spend most of our time in company specific analysis.

Our investment process concentrates on identifying issuers with unrecognised, or under appreciated, recovery or deleveraging potential in their respective category.

Money Markets

Fixed income and money markets have become increasingly complex over recent years. Our objective is to optimise our funds performance given the major risk we manage: credit, liquidity and duration. Our investment process is closely integrated with the credit research team, as we believe that credit is the main driver of performance and risk. On the other hand, we pay strong attention to the fund liquidity, both at the asset level and at the portfolio structure level.

Our dedicated trading team enable us to have extensive access to all markets, both international and domestic. Our multicurrency fund range enables us to allocate to all portfolios for any market opportunity.

As we work closely with both the credit research team and trading desk, and we have a dedicated and tailor made investment tool (PAMFolio), we are best positioned to react and benefit from any market development.

With our Money Market products we aim to offer investors attractive returns on cash through active management within a structured risk framework.