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  • 07/05/2016

Income Partners’ old lessons for new market equals to RMB HY absolute return


The Pioneering Spirit, Strong Onshore Chinese Demand

By Matthew Fletcher

Few investment markets worldwide are seeing greater expansion than Asian fixed income and some teams in the region are standing taller than others. This year, Best-in-Class in the Manager of the Year RMB Fixed Income and Absolute Return categories titles are awarded to Income Partners.

Income Partners was one of the pioneers in the management of Asian fixed income investments. Indeed, when the firm was founded back in 1993, local fixed income markets did not properly exist. Since then the business has grown in tandem with the market itself and become a recognized leader in both traditional and alternative Asian fixed income and credit strategies.

Raymond Gui, Senior Portfolio Manager of the firm’s Renminbi (RMB) denominated investment portfolios, explains that in spite of its burgeoning growth, the company’s investment principles are unchanged: “This is partly due to the continuity in leadership – our two co-founders still head up the firm, as CEO and CIO. We also monitor and understand regional macroeconomic conditions to assess where relative value can be found and then create portfolios with an absolute return mindset.”

As the ‘All Seasons’ moniker suggests, Income Partners’ strategies are designed to perform in every market condition. To achieve this, the management of downside risk is critical. The firm has an enviable track record of outperformance during various down markets over more than 20 years, including the ‘Asian Financial Crisis’ of 1997-98, the ‘dotcom’ bust in 2000 and the more recent ‘Global Financial Crisis.’

The investment process has proven the test of time. Job Campbell, Senior Portfolio Manager of the firm’s absolute return portfolios, commented: “We seek to achieve our investment objectives through three main components: fundamental credit research, top-down macro inputs, and risk management that is achieved through a range of tried-and-tested tools and processes.”

At the issuer level, valuations are determined following industry analysis, company valuation, relative value and an analysis of technical factors. Campbell continues: “Our credit research process considers cyclical and secular factors, barriers to entry and the regulatory environment for specific sectors and companies. There’s also a significant emphasis on the structure of an issue, including collateral and other covenants.”

The depth of the bottom-up credit research helps to mitigate default risk and provides a framework that portfolio managers can use to develop conviction in investment ideas. Campbell added: “By diligently applying our proven investment process, we have been able to identify investments, both long and short, through all stages of the cycle.”

Focusing on Downside Risks

As well as its focus on careful credit selection, the firm’s Asian credit portfolios utilize hedging and overlay strategies to protect against downside volatility, as well as to enhance returns. The result is a highly diversified and efficient portfolio that can generate returns with relatively low volatility over the medium term.

The unwavering focus on risk management is an integral component of the investment process. Macro/top-down strategy risks – including overall credit risk, interest rate and currency risks – are considered alongside portfolio and credit-specific risks. Commenting on the approach to risk management in the portfolios, Campbell noted: “The unconstrained nature of the portfolio means we can use hedging tools including credit shorts through CDS and cash bonds and macro-related instruments to protect the downside. I believe our disciplined approach to portfolio monitoring and risk management has helped the portfolio to perform during the significant economic downturns that have occurred over the past two decades.”

Old lessons for New Markets

Recognizing the unprecedented rise of China as an international growth market, Income Partners launched an RMB-denominated high yield bond product in 2011. Coverage of the RMB bond market was an obvious extension of the firm’s expertise in Asian local currency bond markets. Income Partners pioneered a dedicated RMB investment grade fund back in 2010 and was the first non-bank, local asset manager to be granted a ‘Renminbi Qualified Foreign Institutional Investors’ license in 2013.

Raymond Gui, Senior Portfolio Manager of the firm’s RMB-denominated investment portfolios, explains the guiding investment philosophy: “Essentially we have transplanted the successful credit selection process that is utilized in the firm’s absolute return portfolios. The emphasis remains on company research, again with the over-arching aim of minimizing default risk.”

Income Partners’ has developed a detailed, proprietary internal credit rating system, which incorporates both business and financial risk. “The internal rating system is particularly useful in the analysis of Chinese credits, given the lack of formal ratings that can exist,” noted Gui. In considering business risk, analysts focus on factors including country and industry risk, business model, management team and the strength of a company’s competitive position within its industry. Financial risk metrics consider an issuer’s capital structure and a range of key financial ratios. The two combine to create a single credit rating for all issuers, helping Gui to complete a thorough analysis of the risk/reward trade-off of individual issuers.

The number of issues held in the RMB denominated high yield portfolio is highly diversified. Gui provided further detail: “Each holding usually accounts for no more than 3% of the portfolio, helping to mitigate concentration risk. Country and sector exposures, duration and liquidity, are also actively managed according to the overall macro view. This approach supports our goal of constructing a portfolio that can perform in up markets and, more importantly, help preserve capital in down markets.”

Buoyant Conditions Persist

Uncertainty in financial markets appears likely to continue during 2017. Upcoming elections in Europe, potential policy action from the new US President, and the ongoing deleveraging of China’s economy seem to weigh on investors’ appetite for risk. Volatility could intensify, with trading ranges expected to be quite wide. Against this background, Income Partners expects to amend macro and duration positioning frequently through the year.

In spite of the uncertain market environment, Campbell remains optimistic on the outlook for Asian credit: “We believe the market will continue its tremendous growth trend in 2017 and see selective opportunities due to macro stabilization and the ongoing recovery in certain industries. There are also strong technical factors, with declining net supply, strong onshore Chinese demand for USD credit and the continued regionalization of the investor base. We also believe low default rates locally, and pressure on US rates should see High Yield outperform Investment Grade.”

Although there will remain a significant focus on China, Campbell notes some other factors that could support Asian credit more broadly: “Although the Chinese economy is likely to continue to rebalance, we see robust economic growth in India, Indonesia and the Philippines. With commodity prices firming, Malaysia and Australia are also offering interesting credit trades.”

To benefit from the market volatility that is anticipated, the best strategy for investors in Asian credit may be to invest in unconstrained products whose active management enables them to benefit from market volatility. With this in mind and considering its enviable track record in uncertain times, 2017 looks like another busy year for Income Partners. BM

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領先精神

Matthew Fletcher 撰文

環球投資市場當中,亞洲固定收益的增長,是甚少地區能夠超越的。區內部分投資團隊表現尤其出眾。今年,豐收投資勇奪《指標》年度基金大獎 – 人民幣固定收益及絕對回報兩個類別大獎。

豐收投資是亞洲固定收益投資範疇的領導者。公司於1993年成立時,亞洲區的固定收益市場尚未發展成形。自成立以來,公司與市場同步邁進,在傳統和另類的亞洲固定收益、以及信貸投資策略方面,均成為業界公認的領導者。

豐收投資高級投資組合經理桂林,主力管理公司的人民幣投資基金。他解釋,儘管人民幣投資組合增長迅速,公司的投資原則不會改變。「某程度上是因為我們的領導層十分穩定。我們的兩位創辦人至今仍領導團隊,分別擔當公司的行政總監和投資總監。我們亦會追蹤和分析區內的宏觀經濟狀況,以評估價值相對吸引的板塊,然後建立可獲取絕對回報的投資組合。」

正如常見於公司產品名稱的「All Seasons(全季)」所言,豐收投資的投資策略致力在所有市場狀況下均達到出色表現。故此,對下行風險的管理相當關鍵。在過去20多年的市場風浪中,包括1997至98年的亞洲金融危機、2000年的科網爆破,以及最近的全球金融危機,豐收投資均能在市況下行時表現優於市場。

豐收投資的投資流程是經過長時間的考驗。公司另一位高級投資組合經理、主力管理絕對回報投資組合的康健伯指出:「我們透過三個主要因素達成投資目標:基本信貸研究、自上而下的宏觀數據,以及配合一系列反覆測試的工具和程序的風險管理。」

作為債券發行商,團隊為債券進行估值時,必定會考量行業分析、公司估值、相對價值及技術因素分析。康健伯續稱:「我們的信貸研究程序針對不同行業和企業幾個方面納入考慮範圍,包括週期性和長期因素、行業門檻及調控環境。我們亦十分重視債券的結構,例如該債券有否抵押品和其他契約條款。」

公司以「自下而上」信貸研究減低違約風險,並可作為投資經理開發投資概念的框架。康健伯補充道:「透過積極運用我們行之有效的投資流程,我們能在週期的每個階段中把握投資機會。」

關注下行風險

豐收投資除了重視嚴密的信貸篩選程序,其亞洲信貸投資組合亦運用對沖及分散投資策略以減低下行風險及提升回報。因此,公司採納多元化且高效益的投資組合,在中線投資創造風險相對較低的回報。

對風險管理的高度重視,是投資過程不可或缺的一環。 宏觀/自上而下的投資策略所衍生之風險,包括整體信貸風險、利率及貨幣風險,都視作投資組合及債券獨有的風險一併考慮。康健伯分析投資組合的風險管理方法:「投資組合有不受限制的特點,意味著我們可以使用衍生工具,以減低下行風險,例如利用信用違約掉期(CDS)構建短倉,使用現金債券和宏觀經濟相關的工具等。我相信嚴格的投資組合監控和風險管理,是投資組合於過去20年每當經濟大幅下滑時,仍能表現出色的原因。」

繼往開來

中國市場在國際間毫無預兆迅速崛起,為了把握其中的機遇,豐收投資在2011年推出了離岸人民幣高收益債券產品。涉足人民幣市場,是公司進一步擴展亞洲地區貨幣債券市場的重要一環。豐收投資於2010年始創人民幣投資級別債券的基金,且於2013年成為首間獲得人民幣合格境外機構投資者牌照的非銀行本地資產管理公司。

桂林為我們解釋他的核心投資理念:「我們基本上已將曾用於絕對回報投資組合的信貸篩選程序,套用至其他投資。公司調查仍然是篩選程序的重點,將違約風險減到最低依然是我們的首要目標。」

豐收投資開發了一個詳盡的獨家內部信貸評級系統,將業務及財務風險納入評級條件。桂林指出,「由於內地信貸缺乏有權威的評級,這個內部評級系統對分析內地信貸尤其重要。」

在計算業務風險時,分析師關注一籃子因素,包括地域、行業風險、商業模式、管理團隊及公司在行內的競爭優勢。而金融風險指標,則用作量度發行商的資本結構和多個主要財務比率。結合兩種風險的分析,即可為發行商得出一個統一的信用評級。桂林利用這評級,就所有發行商的風險回報比率進行全面的分析。

人民幣投資基金所持有的債券非常多元化。桂林進一步解釋:「每隻股份通常不會超過投資組合的3%,這有助降低集中風險。我們亦根據整體宏觀展望,積極管理地區和行業風險、組合年期和流動性造成的影響。此方法可幫助我們設計的投資組合,在旺市時表現優異,更重要的是在跌市時穩定保本。」

亞洲信貸將持續向好

2017年金融市場將持續充滿變數。歐洲即將舉行大選、美國新任總統將推行的新政策,以及中國經濟持續去槓桿化,某程度上遏抑了投資者承擔風險的意欲。此外,市場波動可能加劇,預計價格上落幅度將擴闊。在此環境中,豐收投資計劃於年內較頻密地從宏觀經濟及週期方面去調整組合。

儘管市場環境充斥不確定因素,康健伯仍對亞洲信貸的前景保持樂觀:「我們相信市場能在2017年維持強勁增長趨勢,而我們隨着宏觀經濟穩定和部分行業持續復甦,發掘到個別投資機會。我們更觀察到債市中存在很強的技術性因素,例如發債量下降、中國境內投資者對美元信貸的強勁需求,以及投資者群持續區域化。我們亦預計本地違約率偏低,及美國加息壓力,將令高收益債券表現優於投資級別債券。」

雖然市場仍然將投資焦點投放於中國,康健伯指出有其他因素可更支持更大範圍的亞洲信貸:「儘管中國經濟可能繼續轉型,與此同時,我們預料印度、印尼和菲律賓的經濟增長強勁。 隨著商品價格回穩,馬來西亞和澳洲亦為市場提供具潛力的信貸投資機會。」

為了在波動的市場中取得潛在回報,投資於不受基準約束的投資產品,積極管理可使該類產品受惠於市場波動,也許是亞洲信貸投資者的最佳投資策略。正因如此,同時考慮到豐收投資在過去市況不穩時的驕人往績,2017年勢將是公司活躍的一年。 BM

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