Our approach to investing is disciplined and straightforward. The credit investment team applies industry-specific knowledge and experience to analyze and appreciate risk/return potential in every investment.
– Sandy Liang, Head of Fixed Income, Lead Portfolio Manager for Purpose Investments Partners
Fixed-Income Investing at Purpose
At Purpose, we invest with a focus on creating long-term value for our clients. We look past the short-term noise, do our homework, and uncover opportunities the market doesn't fully appreciate.
WEIGHING RISK VS RETURN
Within the fixed-income world, success is often defined exclusively by investment returns. However, when we invest, we weigh the risk of that investment against its potential return. Our credit team are students of risk/ reward and fair value and believe that uncovering asymmetric risk/reward opportunities is more important than forecasting the future.
INDEX-AGNOSTIC STRATEGY
Fixed-income managers tend to manage to the index and don’t deviate materially from duration, sector, or credit ratings. While we’re aware of the indices, we don’t let them dictate our investment approach resulting in our strategy to be index-agnostic.
LENDER-BASED APPROACH
Our credit team’s approach isn’t to simply trade bonds—we view ourselves as lenders who provide capital to financially sound companies. Our goal is to earn attractive returns through coupon payments and/or capital appreciation by focusing on the borrower’s ability to meet its debt obligations through the payment of periodic coupons and the return of the original principal at maturity.
INVESTMENT CAPABILITIES
Using an unconstrainted approach to invest across the capital structure, our investments range from high-quality government bonds to high-yield credit securities to preferred shares and equity opportunities that offer the best risk/ reward profile. To best protect investor capital, we use hedging, in the form of short selling, and active currency management when we see fit.
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Our Investment Process
STEP 1: CONCEPTUALIZATION PHASE
We do the research you’d expect us to do. Our team of sector specialists spends a significant amount of time performing quantitative screening on multiple databases and combing through hundreds of macroeconomic and industry-level data charts to uncover companies the market is sleeping on. We differentiate ourselves by our ability to connect various pieces of information into theses generally not understood by others.
STEP 2: CONVICTION PHASE
Our credit team examines our theses by studying financial statements, engaging with different levels of company management teams, performing competitive industry analysis, and consulting with industry experts. Based on our approach, we hold a portfolio of 50-70 high-conviction ideas, which make up our strategy.
STEP 3: CHECK PHASE
Our portfolios are monitored daily, and each position is assigned a dynamic price and/or credit spread target, which evolves as our theses play out and is based on continuous updates with management teams.
Our Approach to Risk
We view risk as the potential for permanent loss of capital, taking an old-fashioned view of risk by asking ”how much money can we lose, and what is the probability of that loss?”
Our credit team considers risk at every step in the investment process and at both the portfolio and position levels. In addition, our Risk Management Committee oversees each strategy at Purpose to ensure each mandate has the appropriate levels of exposure and risks to achieve its investment objective.
Purpose Credit Team
The Purpose credit team is structured using a sector-specialist approach where each member is an expert in their field. Teamwork and a highly collaborative culture ensure the best ideas are shared and thoroughly tested.
We believe better insights lead to better decisions and potentially better results for our investors. And we have the track record to prove it: the Purpose fixed-income suite boasts historically strong risk-adjusted returns and has won multiple performance awards in the Credit-Focused category at the Canadian Hedge Fund Awards and FundGrade A+ Awards.