Head of Portfolio Management Fixed Income
"Fixed-income managers need to break away from traditional strategies and operate more quickly and consistently when implementing investment strategies. More flexibility is becoming essential."
Union Investment is one of the leading fixed income managers in Europe with expertise across a broad range of sub-asset classes.
Structured credit: opportunities through complexity
For decades, structured credits have been an efficient component in the portfolio construction of professional investors. Alexander Ohl, Head of Credit Solutions at Union Investment, provides reasons that speak for this asset class.
Corporate bonds: riding the interest-rate tailwind
The turnaround in interest-rate policy in 2022 has triggered a renaissance for fixed-income investing. Investment-grade corporate bonds in euros offer more attractive returns again. Michael Schiller, Group Head in Fixed Income Credit, explains the increased interest in the asset class.
We firmly believe that markets are not fully information efficient and that distortions may be caused by different perceptions of credit quality or by technical factors. It is our conviction that only a combination of fundamental research and active portfolio management enables us to spot these inefficiencies and to exploit them profitably. In doing so, it is essential not only to actively manage a portfolio´s assets, but even more important to actively manage all related risks.
Our fixed income portfolio management is organised by sub-asset classes, with each portfolio manager specialising in specific regions or sectors. We believe that research and performance responsibilities cannot be separated and every specialist in a specific region or market segment also functions as a portfolio manager. It is this dual role that enables us to benefit from short communication channels and efficient decision-making processes.
Union Investment has particular expertise in corporates (including structured credit, subordinated bonds and CoCo bonds), emerging market debt, covered bonds and money markets.
The corporate-bond team attaches particular importance to disciplined and process-driven implementation of investment decisions. Whether qualitative or quantitative criteria are given priority depends on the market environment.
Head of Credits
In order to seize opportunities and address risks in the area of corporate bonds, we pursue an active, fundamental management approach. Our aim is to use a combination of bottom-up security selection and occasional targeted top-down decisions to earn attractive, risk-adjusted returns. Our focus is on spotting signs of rating downgrades and defaults in a timely manner. Our portfolio managers are responsible for both research and portfolio construction. They can draw on technical support from our global credit platform developed in-house.
Subordinated bonds offer attractive yield premiums – but a close look at issuers, structure and liquidity is absolutely vital in this market segment.
Head of Corporate Bond Team Financials
The usual investment-grade indices only include a limited number of subordinated bonds, which is why they are not on the radar for all investors. Because they are frequently also complex in structure and the market segment is not very liquid, subordinated bonds make it possible to earn attractive yield premiums. Regulatory requirements also support this segment. Their higher yields provide a larger buffer should interest rates rise, which means that they generate positive returns for a longer period.
Our goal is to optimally balance the conflicting requirements of security, return and liquidity in the complex structured credit market.
Head of Credit Solutions
Securitisations can be an attractive alternative to traditional asset classes due to their variable interest rates, low duration and collateralisation through highly diversified portfolios. They often have an interesting yield premium, as complexity and illiquidity premiums can be collected. Our approach is to seek the optimal balance between the conflicting needs for safety, returns and liquidity in the complex structured credit market. We monitor the liquidity of the securities through efficient risk management. In addition, we make targeted use of the specific characteristics of the market segments to select securitisation structures precisely and globally. A big team with extensive expertise, dedicated tech infrastructure and specific information systems are key to collecting these premiums in the structured credit market.
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