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  • 07/05/2016

HSBC’s credit expert Cecilia Chan explains why alpha dominates and when it goes beyond


A United Front

By Nandini Rao

Clear beliefs, solid teamwork and a well-executed investment process, are the cornerstones of HSBC Global Asset Management’s philosophy. Fixed Income CIO Cecilia Chan explains how the fixed income team’s adherence to these beliefs have resulted in it being recognized as Best-in-Class in the Manager of the Year – Asian Fixed Income Category.

Cecilia Chan is proud of the fixed income team that HSBC has nurtured over the years: “Our structure promotes focused specialization,” Including herself, the team consists of 33 experienced investment professionals (including 21 portfolio managers and 11 credit analysts), with an average investment experience of 12 years. Credit analysts are mainly involved in the fundamental research of individual bond issuers, while portfolio managers are responsible for overall fund construction. Analysts and managers collaborate closely, and everyone contributes to investment decisions. The team is further supported by the global credit research platform, which has over 40 analysts.

“We have investment offices in Hong Kong, Taiwan, India and China, and this structure offers several advantages. First of all, there is consistency in both philosophy and process across the region, and secondly, we have the ability to share our best investment ideas for the benefit of all our clients,” noted Chan. “There is also a regional framework for team members to stress test their ideas with colleagues who operate in different environments,” she continued.

Indeed, Chan actively encourages the sharing of portfolio management and research. This structure ensures consistency in the investment decisions taken for different portfolios and importantly, allows the team to focus on generating superior investment returns within a dedicated and transparent risk framework. “We are one of the best-resourced Asian Fixed Income teams in the world,” notes Chan.

Drivers of Alpha

“What differentiates us from other fixed income houses is our core investment belief that good governance and a well-executed process are the keys to delivering long-term value for our clients,” describes Chan.

The investment process is active, fundamental and value-driven, and uses quantitative inputs on a selective basis. The approach combines a top-down qualitative analysis of macroeconomic dynamics along a structured bottom-up research into individual bond issuers and fixed income securities.

The team utilizes local insights to exploit alpha sources to deliver strong risk-adjusted returns, regardless of market cycles. Furthermore, it seeks to achieve optimal risk-adjusted returns against specified benchmarks by aiming to use as many uncorrelated alpha sources as possible. Chan added: “We are also rigorous in applying consistent risk budgeting frameworks for all portfolios. This means that significant directional positions, which result in any extreme binary outcome are unlikely to occur.”

The investment process allows the flexibility of being both ‘long’ and ‘short’ key fixed income risks. Also, the team can invest with conviction, by taking very defensive positions if necessary and larger positions (long or short) in high-conviction areas.

Chan emphasizes that there are no shortcuts in managing bond funds, particularly in credit markets, where it is important to understand the fundamental details of the bond issues that they invest in. She also states that it is important to have the experience to identify potential concerns.

The Corporate Governance Element

As a company, HSBC Global Asset Management has a strong focus on corporate governance. The fixed income team pays close attention to Environmental, Social and Governance (ESG) factors when investing in bonds. Analysis of ESG-relevant items forms a part of the team’s credit analysis and they look to avoid companies with material issues. The team refers to information from external ESG-dedicated service providers and discusses any concerns in meetings with investee companies.

Managing the Downside

HSBC has a transparent risk-management framework. “We always try to be proactive when monitoring the bonds we buy; we want to be forward looking with regards to the credit development of our investments. Our team takes credit research very seriously, as it is an integral part of our investment process” says Chan. When faced with a downgrade, the team works hard to protect its investors from any negative fallout. Indeed, it preempts default by paying close attention to an issuer’s fundamental credit outlook and the valuation of their bonds.

“For fixed income, the potential upside is asymmetric when compared with the potential downside in a default scenario. So, if our credit analysis shows that there is a material risk of default, then we are more likely to dispose of the bond,” noted Chan.

Credit Fundamentals

HSBC’s fixed income team also analyze the credit fundamentals of every bond and judge its relative value against the often comparable peers. Sometimes, the price of the bond already reflects any negative newsflow so that no action may be required. At other times, the bond may be trading either too cheaply or expensively – these are opportunities to generate alpha.

Risk management also involves measures to ensure that no single holding breaches the team’s investment guidelines.

“As the first line of defense, our team has a good understanding of our portfolio requirements,” said Chan. “This enables them to construct the optimal portfolio within HSBC’s investment guidelines. As a further insurance, we employ a number of investment management systems that allow very detailed analysis of our portfolio risks,” she added. “These controls also prevent trades that are not in line with investment guidelines. The risk management team also monitors all the portfolios post-trade to make sure they are in good order,” concluded Chan. BM

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團結一心抵禦外來風險

Nandini Rao 撰文

在滙豐環球投資管理,清晰的信念、緊密的團隊合作和完善執行投資程序是投資的根本。滙豐環球投資管理固定收益部首席投資總監陳寶枝與我們分享,憑著對這些信念的堅持,公司在亞洲固定收益類別中奪得「同級最佳—年度基金經理」大獎。

滙豐的多年栽培成就了優秀的固定收益團隊,陳寶枝對此感到自豪:「我們的團隊結構讓團員可專注於各自的範疇。」該團隊由33名經驗豐富的投資專才組成(包括陳寶枝在內,有21名投資組合經理和11名信貸分析師),平均投資經驗達12年。信貸分析師主要負責對個別債券發行商進行基本研究,而投資組合經理則負責基金的整體配置。分析師和投資經理緊密合作,所有人都可參與投資決策。另外,擁有逾40名分析師的環球信貸研究平台,同為亞洲團隊提供支援。

「我們在香港、台灣、印度和中國都有投資辦事處,此網絡帶來多個好處。首先,整個亞洲區的投資理念及過程能保持一貫;其次,各地團隊之間可分享最佳的投資點子,所有客戶都會受惠。我們亦有一個區域風險管理框架,讓團隊成員可與其他地區同事,一起就投資點子做壓力測試。」陳寶枝續說。

陳寶枝經常鼓勵團員分享投資組合管理和研究進展,確保不同基金組合的投資決定並無矛盾。重要的是,在專注和透明的風險框架內,團隊可專心於創造超越外界的投資回報。陳寶枝自豪地說,「我們是世上研究資源最豐富的亞洲固定收益團隊之一。」

創造高於指數的回報

陳寶枝稱:「我們較其他固定收益投資公司優勝在於,優良的投資管理和妥善的執行程序是我們的核心信念,亦是為客戶創造長期價值的關鍵。」

滙豐環球投資管理固定收益部投資時,著重主動管理,並以基本面及價值主導,根據量化數據來篩選債券。此方法結合了自上而下、對宏觀經濟變數的質化分析,以及自下而上、針對個別債券發行商和固定收益證券的有系統研究。

無論任何市場週期,團隊均憑著對各地的深入認識辨別出跑贏大市因素的(alpha)來源,以創造強勁的經風險調整回報。此外,為達到比基準指數更佳的經風險調整回報,團隊亦盡可能運用互不相關的alpha來源,越多越好。陳寶枝補充:「我們亦對所有投資組合嚴格地應用一致的風險預算框架,此舉可避免我們累積過大的單邊持倉,極端利潤或極端虧損都不太可能發生。」

團隊的投資過程保持靈活,能夠就主要的固定收益風險作出長倉及短倉部署。團隊亦可在對某些投資靈感特別有信心時,開設大額的長倉及短倉,或在有需要時,採取非常防守的倉位部署。

陳寶枝強調,管理債券基金沒有捷徑,尤其是公司債市場,需要非常深入地了解所持有債券的基本面,累積豐富經驗、懂得識別潛在問題亦同樣重要。

企業治理元素

滙豐環球資產管理是一家對企業治理非常重視的公司。固定收益團隊在投資債券時會密切關注環境、社會和企業治理(ESG)因素。對ESG相關項目的分析亦是信貸分析過程的一部分,團隊會避免投資有重大ESG問題的公司。團隊經常參考由專門從事ESG的服務供應商所提供的數據,並在與目標投資公司會面時討論潛在顧慮。

管理下行風險

滙豐擁有透明的風險管理框架。陳寶枝指:「我們一直積極監察已買入的債券,並重視所投資公司的信貸前景。我們團隊對信貸研究非常嚴謹,因為研究是我們投資過程中不可或缺的部分。」

若持倉的債券被降級,團隊會致力保障投資者免受負面影響。事實上,團隊一直密切關注發行商的基本信貸展望及債券估值,有效阻止了違約的出現。

陳寶枝說,「在固定收益投資領域,若債券出現違約,其潛在上行空間與下行風險並不成正比。因此,如果我們的信貸分析顯示某債券存在重大違約風險,我們很大機會將沽出該債券。」

信貸基本面

滙豐的固定收益團隊會仔細分析每隻債券的信貸基本面,並判斷債券的相對價值是否高過同類債券。有時,債券價格已反映連串負面新聞,未必需要採取任何行動。有時債券的市價可能太低或太貴,這些正是團隊創造跑贏大市回報的良機。

滙豐的風險管理政策之一,是確保並無單一持倉違反投資指引。

陳寶枝解釋:「作為第一道防線,我們團隊對公司的投資管理要求瞭如指掌。這讓他們可在遵守滙豐投資指引的前提下,構建最佳投資組合。為加添一重保障,我們採用多個投資管理系統,鉅細無遺地分析投資組合的風險。」她總結,這些控制措施可防止不合投資指引的交易發生,交易完成後,風險管理團隊亦會繼續監察所有投資組合,確保這些投資不會出現差錯。」BM

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