The CIS Risk Committee works proactively with the portfolio managers to monitor our established risk policies that are tailored to each strategy and monitored on a daily basis to ensure compliance. Each of our strategies has a defined set of guidelines outlined in an Investment Policy Statement (IPS), which address key risk management areas including interest rates, yield curve, diversification, currency, liquidity, credit quality, legal and operations. CIS utilizes both proprietary and third-party risk systems to maintain a robust approach. The Risk Committee meets weekly to review the risk metrics.
For each individual client portfolio CIS considers numerous investment criteria including interest rate outlook, sector and issuer diversification, yield curve positioning, currency allocation and credit quality. In addition, we take client liquidity needs as well as tax implications into our focus in portfolio management. Examples of customization may include restrictions regarding a security type, a target duration, a minimum credit quality or a focus on socially responsible investing (i.e. Environmental, Social and Governance).
Our security selection process considers both structural features (i.e. – coupon, maturity, optionality) as well as our internal credit evaluation when determining relative value. We source bonds from over 70 different dealers, providing market liquidity and best pricing. Our focus is on maintaining the client’s portfolio positioning in line with strategy and portfolio targets. This includes an ongoing assessment of portfolio performance, compliance with risk guidelines and a buy/sell discipline predicated on our philosophy as active managers.
Macro Research: Our portfolio management team formulates their interest rate strategy based on current and prospective real interest rates as well as the slope of respective yield curves. We actively monitor markets to understand the evolution of key factors such as economic growth, inflation expectations and monetary policy.
Credit Research: Through an independent review process, we assign our credit ratings reflecting fundamental credit quality. Using a proprietary evaluation process, our credit ratings must meet or exceed specific thresholds for approval and stand independently to that of the rating agencies.
