In a rapidly shifting global market, skilled active security selection and asset allocation are more important than ever to capitalize on opportunities.
At PineBridge, we focus on strategies that generate alpha for clients across a wide range of fixed income markets via our multisector fixed income platform – from high yield bonds to emerging market (EM) debt to developed market investment grade bonds. We apply our collaborative, high-conviction approach to each and every one of these strategies.
The team’s structure enables cross-sector information-sharing and nimble portfolio positioning, which generates results for our clients. Our investment professionals are specialists in their areas of expertise, and our communication infrastructure links our investment teams across the globe.
With teams in Taiwan, Singapore, Hong Kong, Tokyo, London, Santiago, Los Angeles, Houston, and New York, we cover the world, and we have the expertise on the ground across both developed and emerging markets to evaluate risks and various sources of return.
Our internal credit analysis platform, or CAP, enables 24-hour coverage of markets and allows us to respond to changing events and potential shifts in our portfolios in real time. Whenever an analyst updates their credit recommendations, it’s captured in the system, and the entire team is alerted.
“No matter which time zone I’m in, I’ll receive an update from the analyst,” says Arthur Lau, Co-Head of EM Fixed Income. “Because of this, we’re able to position our portfolios before the market does and capture the most significant part of capital appreciation. We believe this gives PineBridge a clear edge.”
We also hold regular daily, weekly, and monthly fixed income investment forums to review both the latest movements in the markets and our positioning. Our monthly forum covers all asset classes across PineBridge, and all of these interactions enable real-time collaboration among our teams and yield a variety of benefits – most notably our ability to form a complete picture of a given credit.
Our process and philosophy are reinforced by regular, formalized knowledge-sharing between our teams of fixed income experts.
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These partnerships extend to how we conduct due diligence. “When we meet with a company, the equity and bond analysts attend together to ensure we get a holistic view – the complete story,” says Lau. “The company may say something that pleases the equity investor and not the credit investor, but if both sides of our team are aligned, we can get the best assessment of the company’s position.”
A key aspect of our company culture that facilitates this type of communication is our encouragement of expressing opinions, debating points of view on positioning, and collaborating in our investment forums. This spirit is the essence of PineBridge culture and something we emphasize when recruiting new investment professionals.
For our investment professionals to effectively collaborate, they must be able to discuss investment opportunities in terms that everyone can understand. While each segment of our investment platform has specialized research capabilities to assess the nuances of their market, we share a common language: our Fundamentals, Valuations, and Technicals (FVT) approach to security selection.
We evaluate each of these factors both across and within asset classes and use this approach to identify risk, evaluate how that risk will evolve, and layer on the market’s view of that risk – and then finally to shape our overall perspective on relative value.
“That’s what effectively creates the buy/sell recommendation,” Oh says. “Whether it’s at the security level or the broad macro level, it’s ultimately about how we see the risks, how we manage those risks, and how we get paid for those risks within the portfolio. You can apply that principle to any asset class.”
Through our independent, proprietary review process, portfolio managers crystalize their views on the potential impact of shifts in security exposures in light of analysts’ recommendations and overall market sentiment. As part of this approach, we incorporate analyst risk ratings and relative value rankings. All analysts use these metrics each time a credit is discussed or recommended, either in the monthly forums or via CAP. These rankings are reviewed sector by sector – either monthly or bi-monthly, depending on the size of the portfolio – and help determine positioning and prospective shifts.
A core strength of our organization is our fixed income breadth. Our proven capabilities across the spectrum position us to deliver results through specialized and core strategies alike. Our strategies and teams are recognized across the industry for performance excellence, including as Institutional Investor magazine’s senior loan manager of the year for our leveraged finance team.1
The leveraged finance market provides one example of the edge our integration and communication deliver. “One of the most noticeable developments in recent years is the increasing share of cross-border transactions,” Lim says. The market used to be dominated by US issuers issuing leveraged loans in Europe. But after around 2012, Europe-centric businesses began issuing bonds and loans in the US.”
Lim explains, “For example, for a German cable company that has no dollar revenues but is issuing debt in the US, we have a local team covering the German and French cable operators. But we may well own the loans and bonds in Europe and in the US. This is very useful for disseminating information. If a new development happens, it would come out in local time, and our US office would immediately be in the loop, thanks to our European team.”
This collaborative approach extends further, with industry analysts working together across regions to share views. “They will review, for example, the health care sector in the US and look at all the positions we own and do not own,” says Oh. “We’d extend our analysis to the European health care sector and examine the holdings of European issuers. The ongoing dialogue between analysts makes this is a natural exercise and one that happens regularly due to the communication infrastructure we’ve established around the world across our teams.”
Market movements can also offer opportunities to buy at a discount, according to Cook. “Volatility brings dispersion to markets, creating new opportunities to invest in assets at attractive valuations. We rely on our integrated team and process to help us position portfolios to benefit,” he says.
This culture of collaboration extends to our approach to environmental, social, and governance (ESG) considerations, a component of our investment process. In one example, collaboration between our US and Hong Kong teams helped to add an additional layer of insight into our credit assessment of a Southeast Asian financial institution’s very first ESG-themed bond offering.
“We identified a rather challenging information gap relating to the issuer’s financial health in its home market and its need for additional liquidity,” says Alessia Falsarone, Head of Sustainable Investing and Senior Portfolio and Risk Strategist for Developed Markets Fixed Income. “We turned to our team in Hong Kong, who provided local knowledge into the issuer’s access to non-ESG-themed sources of funds in its domestic market – information that is not necessarily covered in the second-party opinions released during an issuer’s roadshow.”
The insights gathered during our subsequent engagement with the issuer proved to be key in gaining high conviction in the company’s longer-term risk-adjusted investment outcome compared with similar offerings in the space. “That’s the value of our global footprint and cross-disciplinary approach to research. As a result, we decided to add the name as an overweight in our portfolios,” Falsarone said.
Corporate responsibility and disclosure are priorities – and in some cases, requirements – for investors in both emerging and developed markets. The diversity of the investible market, particularly with the multitude of countries that encompass EM, demands an active, credit-intensive, and selective approach. That means investors must engage with company management teams to assess the corporate culture and controlling influences. These are common factors in our ESG approach for both emerging and developed markets.
PineBridge’s heritage of ESG integration and specialization within sectors and strategies has enabled us to develop our own internal ESG scoring system for companies around the globe. We track the evolution of our ESG scores over time to see whether a company has changed or whether our investment decisions are in sync with our ESG scoring.
We believe our fixed income platform is particularly well positioned to tap opportunities, fueled by our flexibility to pursue openings in the market that others may miss.
“We’re a nimble manager in a world where many managers have become gargantuan,” Oh says. “Mega-managers are pushing indexing because they no longer have the ability to add value, given that they ‘own the market.’ Not only do we operate in strategies that have the potential to create better outcomes, we are sized to not own the market and are able to position to generate that alpha.”
PineBridge’s multi-asset credit capabilities are also a distinct differentiator. Global credit markets are facing headwinds that may prevent many traditional investment approaches from delivering the results asset owners need to address their liabilities. So flexible strategies like these are more important than ever.
“Global fixed income markets are constantly evolving, creating inefficiencies that cause prices to dislocate from their fair value,” according to Oh. “Our integration and collaboration allow our teams to keep pace with these dynamics in real time and position our portfolios accordingly.”
1 Third-party rankings and recognition from rating services or publications are no guarantee of future investment success. Working with a highly rated advisor does not ensure that a client or prospective client will experience a higher level of performance or results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client’s evaluation. Generally, ratings, rankings, and recognition are based on information prepared and submitted by the advisor, and are part of a process in which not all advisors elect to participate. A more detailed disclosure of the criteria used in making these rankings can be available upon request.