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Stewart Investors manage investment portfolios on behalf of our clients over the long term and have held shares in some companies for over 20 years. They launched their first investment strategy in 1988.

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Leader in systematic equities across market cap weighted indices, smart beta and active quantitative strategies

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High Yield Fixed Income

High Yield Fixed Income

High Yield Fixed income can distribute stable income and total return while dampening volatility relative to equities and adding yield relative to core bonds.

Active management and a focus on downside risk can help produce stable long-term out performance.  We aim to generate consistent alpha in the top quartile relative to peers which over long periods leads to attractive peer comparisons.

Our Process

Our Strategy strives to maximize risk adjusted returns, and seeks superior absolute returns over a market cycle, with lower volatility than the broad market. Our approach involves maximizing the default adjusted yield and spread of a diversified portfolio, implementing a fundamental, value-driven investment style. First, and foremost, our approach is about risk control. Default risk is the dominant risk factor, and all portfolio investments meet stringent, and quantifiable minimum “margin of safety” requirements. Secondarily, we strive never to buy credit risk at the wrong price. An optimal, risk adjusted, portfolio construction combines dynamic fundamental, bottom-up selection, with continuous top-down portfolio risk management.

Margin of safety

Default risk is the dominant risk factor, and all portfolio investments must meet stringent, and quantifiable minimum “margin of safety” requirements.

Investment process

Furthermore, the investment process strives never to buy credit risk at the wrong price utilizing a default-adjusted yield and spread methodology and aims to maximise the default-adjusted yield and spread of a diversified portfolio. We have a strong credit research team that utilizes our process to allocate issuers that pass our stringent quality control one of our proprietary Risk Groups, which are used to identify attractive investment opportunities.

Contrarian risk positioning

Our tactical risk positioning relative to the broad high yield market is typically contrarian; often considerably divergent to peers and largely indifferent to a benchmark index.

While our investment process is rigorous in implementation, it is conceptually simple to summarize

Matt Philo

Co-Head of High Yield strategies

Investment process summary

  • Minimum yield screen: with "positive event potential" exceptions

  • Minimum margin-of safety requirements; quantified and stringently applied

  • Qualitative fundamental corporate assessments to further safeguard against default risk

  • Default adjusted methodology, focused on the spread premium necessary to overcompensate to estimated default risk

  • Catalysts for total return, expected to result in total returns above a coupon based yield

  • Portfolio construction, combines bottom-up credit selection with top-down portfolio risk management

  • Credit risk control: managed by the dynamic, continuous implementation of the disciplined bottom-up investment process (as described above). Primary credit risks include: default, Negative Event and ESG risks.

  • Risk monitoring and review: includes daily portfolio reporting and analysis

Meet the team

Matt Philo

Senior Portfolio Manager, Co-Head of High Yield

Jason Epstein

Senior Portfolio Manager, Co-Head of High Yield

Linda Grillo

Head High Yield Trader

Jonathan Mann

SENIOR ANALYST

The information contained within this document is generic in nature and does not contain or constitute investment or investment product advice.  The information has been obtained from sources that First Sentier Investors (“FSI”) believes to be reliable and accurate at the time of issue but no representation or warranty, expressed or implied, is made as to the fairness, accuracy, completeness or correctness of the information.  Neither FSI, nor any of its associates, nor any director, officer or employee accepts any liability whatsoever for any loss arising directly or indirectly from any use of this document.  

This document has been prepared for general information purpose. It does not purport to be comprehensive or to render special advice. The views expressed herein are the views of the writer at the time of issue and may change over time.  This is not an offer document, and does not constitute an investment recommendation. No person should rely on the content and/or act on the basis of any matter contained in this document without obtaining specific professional advice.  The information in this document may not be reproduced in whole or in part or circulated without the prior consent of FSI.  This document shall only be used and/or received in accordance with the applicable laws in the relevant jurisdiction.

In Hong Kong, this document is issued by First Sentier Investors (Hong Kong) Limited and has not been reviewed by the Securities & Futures Commission in Hong Kong. In Singapore, this document is issued by First Sentier Investors (Singapore) whose company registration number is 196900420D. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore. 

First Sentier Investors is a business name of First Sentier Investors (Hong Kong) Limited. First Sentier Investors (registration number 53236800B) is a business division of First Sentier Investors (Singapore).  

First Sentier Investors (Hong Kong) Limited and First Sentier Investors (Singapore) are part of the investment management business of First Sentier Investors, which is ultimately owned by Mitsubishi UFJ Financial Group, Inc. (“MUFG”), a global financial group. First Sentier Investors includes a number of entities in different jurisdictions. 

MUFG and its subsidiaries are not responsible for any statement or information contained in this document. Neither MUFG nor any of its subsidiaries guarantee the performance of any investment or entity referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk, including loss of income and capital invested.