Preservation of capital, and conservative growth based on regular income generation
Preserving investors’ capital is BQIM’s highest goal. Portfolio Management performs rigorous, bottom-up analysis on each target asset to model the probability of returning its capital in whole, and also interest income, in a timely manner and in different scenarios. Our team seeks value opportunities across every part of the domestic credit markets, and focuses on income-generating assets to provide our investors with stable cash flow. We also assess each asset on its secondary market liquidly in certain scenarios. Modelling mark to market volatility of the assets, and spread duration of the portfolio is key to building and managing a portfolio against the individual strategy’s liquidity profile.
Detailed Due Diligence of all Portfolio Assets
We approach asset selection using both a top-down perspective, and a bottom-up fundamental credit analysis selection process. The portfolio management team is focused on the fundamental value of each asset, based on its ability to meet coupon payments and return capital. Sourcing secondary market liquidity is key in the investment process. Portfolio management seeks regular secondary pricing updates from the market. The aim is to observe whether pricing is far from recent trading marks, and monitor developments across all liquidity providers. Regular communication with issuers, market makers and other key investors is essential to this process.
Our team undertakes detailed due diligence on target assets. Once an asset is selected for a particular strategy, we continue monitoring that asset to ensure it’s performing as expected. Importantly, assessment of the credit worthiness of any asset is carried out without relying on external or third party analysis from rating agencies or research. If an asset is found to be underperforming, further due diligence will take place with the issuer/servicer to overlay its performance against downside micro and macro scenarios. For each asset, key credit triggers are set at purchase. If the asset doesn’t meet certain hurdles, portfolio management will endeavour to sell or hedge it.