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, and we seek to do so across a wide range of fixed income markets. We deliver alpha in investment-grade bonds from developed markets, in emerging market (EM) debt, and leveraged finance via our multisector fixed income platform. 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, 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, known as 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 any analyst has updated his or her 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 can and capture the most significant part of capital appreciation. We believe this clearly demonstrates PineBridge’s edge.”
We also hold regular fixed income investment forums, meeting daily, weekly, and monthly to review the latest movements in the markets, along with our positioning. Our monthly forum includes 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 credit.
Our process and philosophy is reinforced by regular, formalized knowledge sharing between our teams of fixed income experts.
For illustrative purposes only. We are not soliciting or recommending any action based on this material.
These partnerships extend to how we conduct due diligence. “When we meet with a company, the equity and bond analysts attend together, making sure we get a holistic view – the complete story. 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,” according to Lau.
A key part of our company values that makes this communication viable is the openness in expressing opinions, debating points of view on positioning, and collaborating in our investment forums. This is the essence of our culture and something we place great importance on when recruiting new investment professionals.
In order for our investment professionals to effectively collaborate, they must be able to discuss investment opportunities in terms that everyone in the company can understand. While each segment of our investment platform has specialized research capabilities to help each team 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. We use this approach to identify risk, evaluate how that risk will evolve, layer on the market’s view of that, and then finally give shape to our overall relative value perspective.
“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 view 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 senior loan manager of the year from Institutional Investor magazine for our leveraged finance team1.
The leveraged finance market provides one example of the edge our integration and communication deliver. “One of the most noticeable developments in our world in recent years is the increasing share of cross-border transactions,” Lim says. Most of the market used to consist of US issuers issuing leveraged loans in Europe. But after around 2012, Europe-centric businesses began issuing bonds and loans in the US.
“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,” she says.
This collaborative approach extends further, with industry views formed by industry analysts working together across regions. “They will review, for example, the health care sector in the US and look at all the positions we own and do not own. We’d extend our analysis to the European health care sector and examine the holdings by European issuers. There’s an ongoing dialogue between the analysts so that this is a natural exercise and one that happens regularly due to the communication infrastructure we’ve established around the world across our teams,” said Oh.
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. For the developed markets fixed income team, this ESG component provides an extra layer of insights that helps form portfolio decisions.
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. 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,” says Alessia Falsarone, Head of Sustainable Investing and Senior Portfolio and Risk Strategist for Developed Markets Fixed Income.
While demand has risen for ESG strategies in the market in recent years, “for us, ESG integration started much earlier at the portfolio levels,” according to Falsarone. “It’s in line with our culture of risk evaluation and alignment of the sources of return we seek, with an understanding of the risks that are embedded in particular exposures to issuers or to macro themes. For instance, you cannot evaluate a technology company unless you discuss the semiconductor supply chain in Southeast Asia, the nuances of cybersecurity law in China, and IP protection in developed markets. It just simply wouldn’t work.”
Corporate responsibility and disclosure are priorities – and in some cases, requirements – for investors in emerging and developed markets in equal measure. 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 have to 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 the company has changed or whether our investment decisions are in sync with our ESG scoring.
Overall, we believe our fixed income platform is particularly well positioned for opportunity, fueled by our flexibility to pursue opportunities 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.”
We’re also uniquely positioned through our multi-asset credit capabilities. Global credit markets are facing headwinds that may prevent many traditional investment approaches from delivering the results asset owners need to meet 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.
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Opinions: Any opinions expressed in this document represent the views of the manager, are valid only as of the date indicated, and are subject to change without notice. There can be no guarantee that any of the opinions expressed in this document or any underlying position will be maintained at the time of this presentation or thereafter. We are not soliciting or recommending any action based on this material.
Risk Warning: All investments involve risk, including possible loss of principal. If applicable, the offering document should be read for further details including the risk factors. Our investment management services relate to a variety of investments, each of which can fluctuate in value. The investment risks vary between different types of instruments. For example, for investments involving exposure to a currency other than that in which the portfolio is denominated, changes in the rate of exchange may cause the value of investments, and consequently the value of the portfolio, to go up or down. In the case of a higher volatility portfolio, the loss on realization or cancellation may be very high (including total loss of investment), as the value of such an investment may fall suddenly and substantially. In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved.
Performance Notes: Past performance is not indicative of future results. There can be no assurance that any investment objective will be met. PineBridge Investments often uses benchmarks for the purpose of comparison of results. Benchmarks are used for illustrative purposes only, and any such references should not be understood to mean there would necessarily be a correlation between investment returns of any investment and any benchmark. Any referenced benchmark does not reflect fees and expenses associated with the active management of an investment. PineBridge Investments may, from time to time, show the efficacy of its strategies or communicate general industry views via modeling. Such methods are intended to show only an expected range of possible investment outcomes, and should not be viewed as a guide to future performance. There is no assurance that any returns can be achieved, that the strategy will be successful or profitable for any investor, or that any industry views will come to pass. Actual investors may experience different results.
Information is unaudited unless otherwise indicated, and any information from third-party sources is believed to be reliable, but PineBridge Investments cannot guarantee its accuracy or completeness.
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Disclosures by location:
Australia: PineBridge Investments LLC is exempt from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) in respect of the financial services it provides to wholesale clients, and is not licensed to provide financial services to individual investors or retail clients. Nothing herein constitutes an offer or solicitation to anyone in or outside Australia where such offer or solicitation is not authorised or to whom it is unlawful. This information is not directed to any person to whom its publication or availability is restricted.
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Kuwait: The offering of any security in any vehicle has not been approved or licensed by the Kuwait Capital Markets Authority or any other relevant licensing authorities in the State of Kuwait, and accordingly does not constitute a public offer in the State of Kuwait in accordance with Law no. 7 for 2010 regarding the Establishment of the Capital Markets Authority and the Regulating Securities Activities (“CMA Law”). This document is strictly private and confidential and is being issued to a limited number of professional investors: A) who meet the criteria of a Professional Client by Nature as defined in Article 2-6 of Module 8 of the Executive Regulations No. 72 of 2015 of the CMA Law; B) upon their request and confirmation that they understand that the securities have not been approved or licensed by or registered with the Kuwait Capital Markets Authority or any other relevant licensing authorities or governmental agencies in the State of Kuwait; and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purposes whatsoever.
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Netherlands: PineBridge Investment Ireland Limited, Netherlands Branch is licensed and regulated by The Dutch Authority for the Financial Markets (AFM). This is a branch office of PineBridge Investments Ireland Limited, licensed and regulated by the Central Bank of Ireland.
Peru: Specifically, the Interests will not be subject to a public offering in Peru. The Interests described herein have not been and will not be approved by or registered with the Peruvian Superintendency of Capital Markets (Superintendencia del Mercado de Valores, or the “SMV”) or the Lima Stock Exchange (Bolsa de Valores de Lima). Accordingly, the Interests may not be offered or sold in Peru except, among others, if such offering is considered a private offer under the securities laws and regulations of Peru. The Interests cannot be offered or sold in Peru or in any other jurisdiction except in compliance with the securities laws thereof. In making an investment decision, institutional investors (as defined by Peruvian law) must rely on their own examination of the terms of the offering of the Interests to determine their ability to invest in the Interests. All content in this document is for information or general use only. The information contained in this document is referential and may not be construed as an offer, invitation or recommendation, nor should be taken as a basis to take (or stop taking) any decision. This document has been prepared on the basis of public information that is subject to change. This information may not be construed as services provided by PineBridge Investments within Peru without having the corresponding banking or similar license according to the applicable regulation.
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Sweden: PineBridge Investments Ireland Limited Sweden filial is licensed and regulated by Finansinspektionen. This is a branch office of PineBridge Investments Ireland Limited, licensed and regulated by the Central Bank of Ireland.
Switzerland: This material is issued by PineBridge Investments Switzerland GmbH and classes this communication as a financial promotion which is intended for Institutional and Professional clients as defined by the Swiss Federal Financial Services Act ("FinSA") and its implementing ordinance, the Federal Financial Services Ordinance ("FinSO"). PineBridge Investments Switzerland GmbH is affiliated with the Swiss Chambers’ Arbitration Institution (SCAI), 4, boulevard du Théâtre, P.O. Box 5039, 1211 Geneva 11, Switzerland, Tel: +41 (0)22 819 91 57.
Taiwan: PineBridge Investments Management Taiwan Ltd. Is licensed and regulated by Securities and Futures Bureau of Taiwan (SFB). In Taiwan, this material may not be suitable to investors and is not reviewed or endorsed by the SFB.
United Kingdom: This material is issued by PineBridge Investments Europe Limited, licensed and regulated by the Financial Conduct Authority. In the UK this communication is a financial promotion solely intended for professional clients as defined in the FCA Handbook and has been approved by PineBridge Investments Europe Limited. Should you like to request a different classification, please contact your PineBridge representative.
In the UK, this material may also be issued by PineBridge Benson Elliot LLP, registered in England (company number OC317119) with its registered address at 50 Hans Crescent, London, SW1X 0NA. PineBridge Benson Elliot LLP is authorised and regulated by the Financial Conduct Authority.
Uruguay: The sale of the securities qualifies as a private placement pursuant to section 2 of Uruguayan law 18.627. The issuer represents and agrees that it has not offered or sold, and will not offer or sell, any securities to the public in Uruguay, except in circumstances which do not constitute a public offering or distribution under Uruguayan laws and regulations. The securities are not and will not be registered with the Central Bank of Uruguay to be publicly offered in Uruguay. The securities correspond to investment funds that are not investment funds regulated by Uruguayan law 16,774 dated 27 September 1996, as amended.
Last updated 3 June 2021