Anneau’s Fixed Income Philosophy is founded on our belief that the global monetary and fractional reserve banking systems are structured such that they inherently create short-term and long-term credit cycles; with varying opportunities and challenges.

Our Philosophy is to always profoundly analyse and understand different fixed income securities and markets, their current cyclical positioning in both these cycles and thereon position our portfolios in view of preserving and growing our clients’ capital and fixed income allocation. In order to deliver sustainable and consistent industry leading excess returns to our fixed income clients over different credit and economic cycles, we rely significantly on our robust fixed income investment process; whose main objective is to preserve capital and enhance yield (which is the essence of fixed income investments).

Our robust risk management philosophy ensures that risk mitigation and control is at the heart of our fixed income strategies. Its objective is to preserve capital while enhancing income/yield. Our risk management process focuses on credit, interest rates, reinvestment and event-driven risks. Our research is based on fundamental credit analysis and macro-economic research (including credit analysis focused on credit worthiness, credit quality and relative value, interest rates, currencies, amongst others). These sound processes reinforce our confidence in our ability to actively manage our duration targets in enhancing our portfolios’ risk return spreads.

Anneau’s active fixed income strategies stretch across a range of investment styles and segments of the fixed income universe (primarily credit and debt), including Global, Local, African, Emerging markets debt, Corporate credit, Sovereign bonds and loans). Our portfolios employ an investment process which is research driven and blends disciplined portfolio construction with regular risk and performance review.

Similar to our equity strategies, Anneau’s Fixed income philosophy can be segregated into the following two (2) credit cycles and their corresponding strategies:​

1. LONG TERM CREDIT CYCLE AND STRATEGIC FIXED INCOME PORTFOLIO STRATEGY
(LONG DURATION STRATEGY)

Anneau’s strategic fixed income allocation is based on our research and analysis of longer-term credit cycles and our inherent ability to follow the various shorter-term credit cycles within these long-term credit cycles of booms and bursts. Our longer-term allocation, where applicable, uses fixed income ETFs and/or buying and holding the main issues and index constituents with the sole purpose of delivering market returns or Beta.

In which case, we shall use index strategies seeking to closely track the returns of a corresponding index, generally by investing in substantially the same underlying securities within the index or in a subset of those securities selected to approximate a similar risk and return profile of the index. Our Beta fixed income solutions span across the debt universe and is aimed to help our clients access and manage exposure to the local, regional (African) but also global (including emerging markets) bond markets.

Our portfolio construction process entails detailed benchmark knowledge, efficient trading, and performance analysis. Daily updates from index providers keep us abreast of new securities and any index methodology changes.

2. SHORT-TERM CREDIT CYCLE AND TACTICAL FIXED INCOME PORTFOLIO STRATEGY
(SHORT DURATION STRATEGY)

Our team adopts a model-integrated approach to active fixed income that combines the insights of our people with a quantitative research platform to generate high quality alpha across fixed income asset classes.

The distinguishing feature of Anneau’s fixed income investment management style is the ability to generate alpha within a risk-managed framework. Real-time analysis of a vast array of risk measures allows assessment of the potential impact of various strategies on total return. Most importantly, at Anneau, our tactical approach to Alpha creation is our ability to focus on the technicals of the securities, the issuers and the pricing. Over the years, we have understood that policies and regulatory factors often lead to mis-priced risk premia and so the resulting opportunities in embedded options. ​

Our ‘edge’ revolves around our ability to factor in these mis-pricing and so to tactically select and hold only the most attractive bonds for our tactical portfolio positioning.

Our professionals identify unrecognised value in the fixed income markets through rigorous proprietary fundamental research that balances bottom-up research analysis with top-down investment themes.

Macro-economic and credit researches are essential to our portfolio construction process. The investment decisions are further based on issuer and security selection, sector rotation, duration and yield curve strategies as well as currency strategies, where applicable. Our specialist fixed income team has developed the expertise to offer clients access to a range of opportunities in debt (whether public of private).