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Specialist in Asia Pacific, Japan, China, India and South East Asia and Global Emerging Market equities.

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Specialists in equity portfolios in Asia Pacific, emerging markets, global and sustainable investment strategies

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Important Note Click to maximise

This document is a financial promotion for The First Sentier High Yield Fixed Income Strategy. This information is for professional clients only in the UK and EEA and elsewhere where lawful. Investing involves certain risks including:

  • The value of investments and any income from them may go down as well as up and are not guaranteed. Investors may get back significantly less than the original amount invested.
  • Currency risk: the Fund invests in assets which are denominated in other currencies; changes in exchange rates will affect the value of the Fund and could create losses. Currency control decisions made by governments could affect the value of the Fund's investments and could cause the Fund to defer or suspend redemptions of its shares..
  • Credit risk: the issuers of bonds or similar investments that the Fund buys may get into financial difficulty and may not pay income or repay capital to the Fund when due.
  • Interest rate risk: bond prices have an inverse relationship with interest rates such that when interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall.
  • Currency hedged share class risk: Hedging transactions are designed to reduce currency risk for investors. There is no guarantee that the hedging will be totally successful or that it can eliminate currency risk entirely.
  • Derivative risk: derivatives are sensitive to changes in the value of the underlying asset(s) and/or the level of the rate(s) from which they derive their value.  A small movement in the value of the assets or rates may result in gains or losses that are greater than the amount the Fund has invested in derivative transactions, which may have a significant impact on the value of the Fund.
  • Below investment grade risk: below investment grade debt securities are speculative and involve a greater risk of default and price changes than investment grade debt securities. In periods of general economic difficulty, the market prices of these types of securities may decline significantly.

For details of the firms issuing this information and any funds referred to, please see Terms and Conditions and Important Information.  

For a full description of the terms of investment and the risks please see the Prospectus and Key Investor Information Document for each Fund. 

If you are in any doubt as to the suitability of our funds for your investment needs, please seek investment advice.

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 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

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