Allianz Global Multi Asset Credit Strategy

The present environment of low yields and very mixed performance across countries and sectors means that investors in search of yield need to broaden their investment universe by adopting a global approach and diversifying into new segments and markets. Our Global Multi Asset Credit strategy makes it possible to take advantage of the opportunities available in the global credit market while targeting positive returns over the market cycle. The strategy is unconstrained; it aims to achieve returns through controlled risk management however without the restrictions of a benchmark.

Over the last few years there has been a significant shift in investors’ approach to credit. Multi asset credit ‘MAC’ strategies have proliferated as the traditional partitions between investment grade, high yield and securitised debt have broken down. In many cases, these types of funds have replaced allocations to investment grade credit.

We believe that a MAC strategy offers not just an interesting alternative to traditional investment grade credit, but could even act as a lower volatility substitute for equities over the long term.

Philosophy

“Good things happen to good companies”

The aim of our strategy is to generate positive returns throughout the interest rate and economic cycles, firstly by allocating to different credit asset classes, and secondly through bottom-up individual security selection. We invest in healthy and improving issuers which we believe will provide superior long-term total returns. Our average annual return target is Libor +3% with < 6% volatility over a cycle while maintaining an average investment grade rating.

The strategy is based on asset allocation between four asset classes: investment grade industrials and financials, high yield industrials, emerging market credit and securitised credit. Other strategies may include convertibles, preference shares, bank loans or distressed debt to try and be more of a substitute for high yield debt, but without the duration. We have concerns that higher return expectations are hard to meet in the current environment and can lead to excessive risk taking. We want our investors to eat well and sleep well.

Process

Our approach begins with our philosophy of investing in healthy and improving issuers which we believe will provide superior long-term total returns. In particular, companies with relatively low debt and sound balance sheets and entities that are turning around after a period of deteriorating fundamentals, should outperform companies encumbered by poor debt dynamics.

The investment process follows four clear steps:

  • Relative value analysis: Proprietary research on global growth and credit conditions lead us to define a total risk budget and asset allocation.
  • Portfolio structure: The investment team creates a portfolio structure reflecting asset allocation views to arrive at high level portfolio targets in terms of geography, rating, etc.
  • Security selection: Diligent micro-level analysis is conducted on each issuer with in-depth fundamental research as well as proprietary quantitative models. With no constraints from a benchmark, the team is free to focus on high conviction ideas.
  • Implementation: Positions are sized according to perceived risk and return and passed to a dedicated trade execution desk for implementation. We continually review the performance of each security and our strong sell discipline leads us to reallocate risk if we meet our profit targets or believe better opportunities are available elsewhere.

Risk Management

We view risk management as the responsibility of every member of the investment team, with a focus on diversification and downside protection. Our chief metric for risk management is Weighted Duration Times Spread (WDTS). This measures the sensitivity of the portfolio both to underlying government interest rates and credit spreads. The advantages of this are that it allows for consistent and transparent analysis across investment grade and high yield allocations, while also adapting to daily moves in both risk factors.

In addition, we have a suite of proprietary downside protection tools to control for risk. For investment grade credit, we have a proprietary Credit Watch Model and for sub-investment grade issuers, the High Yield Credit Filter. These tools have proved invaluable in helping to avoid distress and defaults throughout our history of investing in these areas.

David Newman

Global Multi Asset Credit team

The Global Multi Asset Credit team is a talented, experienced and well-resourced team lead by David Newman, Head of Global High Yield and Multi Asset Credit Strategies.

For more information on our Global Multi Asset Credit Strategy or other related information and queries, please contact us directly.
CONTACT US

What other strategies are available?

 
Back to Fixed Income page

Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors might not get back the full amount invested.  

Investing in fixed income instruments may expose investors to various risks, including but not limited to creditworthiness, interest rate, liquidity and restricted flexibility risks. Changes to the economic environment and market conditions may affect these risks, resulting in an adverse effect to the value of the investment. During periods of rising nominal interest rates, the values of fixed income instruments (including short positions with respect to fixed income instruments) are generally expected to decline. Conversely, during periods of declining interest rates, the values of these instruments are generally expected to rise. Liquidity risk may possibly delay or prevent account withdrawals or redemptions.

Past performance is not a reliable indicator of future results. If the currency in which the past performance is displayed differs from the currency of the country in which the investor resides, then the investor should be aware that due to the exchange rate fluctuations the performance shown may be higher or lower if converted into the investor’s local currency.

The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail. 

This is a marketing communication issued by Allianz Global Investors UK Limited, 199 Bishopsgate, London, EC2M 3TY, www.allianzglobalinvestors.co.uk.   Allianz Global Investors UK Limited, company number 11516839, is authorised and regulated by the Financial Conduct Authority.  Details about the extent of our regulation are available from us on request and on the Financial Conduct Authority's website (www.fca.org.uk). The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted; except for the case of explicit permission by Allianz Global Investors UK Limited.  

Allianz Global Investors

You are now leaving the Allianz Global Investors’ website and being redirected to

Welcome to the Allianz Global Investors website dedicated to the United Kingdom

Select Role
  • Adviser & Wealth Manager
  • Individual Investor
  • Institutional Investor
  • You have connected to this site as a “Professional” as defined by MiFID.  To continue, you must have the experience and knowledge required in investment management, particularly regarding the risks involved in accessing this site.

    If you are not a “Professional” client, we invite you to leave this page and reconnect on the “Individuals” page from the Allianz Global Investors website.

    US persons: The information shown on this site is not intended for US citizens, US nationals, or to those US persons such as defined by “Regulation S” of the Securities and Exchange Commission under the Security Act of 1933.

    This site is only intended to provide information on Allianz Global Investors and the products authorised for marketing in the UK.  The information presented on this site does not constitute an offer to sell or subscribe to a financial instrument.

    The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. Your access is subject to the UK regulation and to the legal terms and general conditions of access to this site.

    In choosing to access our site, you acknowledge that you understand and accept these conditions.  We advise, for your best interest, to read these conditions carefully.

    Please read the following page carefully before proceeding as it contains important information concerning your use of the website and explains certain legal and regulatory restrictions applicable to any investment in Allianz Global Investors investment products. By pressing ‘Accept’ you agree that you have read and understood the following information.

    The material on this site is directed only at persons in the UK and does not constitute an offer or invitation to buy or sell the funds to persons in any jurisdiction other than the UK.

    Allianz Global Investors (AllianzGI) has taken reasonable care to ensure the accuracy of information available through the site. However, the information may be amended at any time by AllianzGI without notice. As far as it is permitted under the Financial Services and Markets Act 2000, AllianzGI does not accept liability for any loss, direct or indirect, owing to reliance on any information contained herein.

    Opinions expressed whether in general or both on the performance of individual funds and in a wider economic context represent the views of the contributor at the time of preparation. They are subject to change and should not be interpreted as investment advice which AllianzGI is not authorised to give.

    This site may provide links to third party websites over which AllianzGI has no control. These links are provided for your convenience and AllianzGI accepts no responsibility for the content of such websites.

    For your security we may record or randomly monitor all telephone calls.

    A word of warning
    Past performance does not predict future returns. The value of investments and the income from them can go down as well as up and an investor may not get back the amount invested. 

    Exchange rate fluctuations may vary causing the value of overseas investments to go down or up. For your own security any calls may be recorded and randomly monitored.

    For information on any specific risks associated with our funds and products please see our Key Investor Information Documents (KIIDs) and Supplementary Information Documents (SIDs).

    The use of this website is subject to English Law and any dispute will fall under the jurisdiction of the English courts.

    Regulation and Status Disclosure
    Allianz Global Investors represents products and services of Allianz Global Investors UK Limited, www.allianzglobalinvestors.co.uk. Allianz Global Investors UK Limited is an investment company, incorporated in the United Kingdom, with its registered office at 199 Bishopsgate, London, EC2M 3TY. 

    Allianz Global Investors UK Limited, company number 11516839, is authorised and regulated by the Financial Conduct Authority. Details about the extent of our regulation are available from us on request and on the Financial Conduct Authority’s website (www.fca.org.uk). The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted; except for the case of explicit permission by Allianz Global Investors UK Limited.

    Throughout the website Allianz Global Investors UK Limited may sometimes be referred to as Allianz Global Investors or AllianzGI.

    Copyright
    Copyright in this website is owned by Allianz Global Investors UK Limited. The copyrights of third parties are reserved.

    You may download or print a hard copy of individual pages and/or sections of the website, provided that you do not remove any copyright or other proprietary notices. Any downloading or other copying from the website will not transfer title to any software or material to you.

    You may not reproduce (in whole or part), transmit (by electronic means or otherwise), modify, link or use for any public or commercial purpose the website without the prior permission of Allianz Global Investors.

    Cookies
    Allianz Global Investors UK Limited uses session cookies for the purpose of saving data relating to the management of a user session in the memory of the web browser on the user’s computer. By cookie it is meant the small text file that is stored on the hard disk of a computer by the web browser on the said computer. Such file contains information sent by the web server of the Website that a user has visited. The information derived from session cookies enables Allianz Global Investors UK Limited to identify which areas of the Website are seemingly of more interest to users so that it can improve the Website and the information provided to users. The data which is stored via session cookies does not include any private information regarding the user, and is erased as soon as the browser is shut down. It is to be noted that most web browsers are set up in such a way that they automatically accept cookies. Users can, however, amend the configuration of the web browser on their computers so that they are systematically notified of any instance where the Websites that they are about to visit contain cookies.

Please check the checkbox to accept the terms and conditions.