Investment Grade Corporates & Financials
YCAP focuses on global and liquid Investment Grade bonds, excluding sovereign exposure from its investment universe to limit political influence factors. YCAP applies no active currency strategies. Foreign currency exposure related to bond investments is systematically hedged. Liquidity levels are essential to allocation decisions and measured by issue volume. YCAP considers the values of cash bonds versus the derivative alternatives (CDS) and manages comprehensive long/short-, Long-Only or Short-Only- CDS-strategies as well as debt/equity strategies. All CDS strategies are based on a fundamental and future-oriented analysis and on an active risk management approach.
High Yield bonds are a credible alternative to traditional bond investments. They offer investors a specific way of diversification. Performance is often driven by very different, rather idiosyncratic factors. At the same time investors are provided with an above-average income, which holds up well in a rising-rate environment and can help to reduce corresponding volatility without a significant drop in yields. High Yield bond selection is based on in-depth fundamental analysis and continued monitoring of each company by the YCAP investment team, which ensures investments in high quality issuers with stable or rapidly improving fundamentals featuring a definite capacity to service their debt.
Investing in European Asset-Backed Securities is an attractive investment opportunity for credit investors seeking yields and who are willing to enhance their diversification within the Fixed Income universe. European ABS transactions have a strong risk/return profile and their performance has been stable over the last years combined with a low level of defaults experienced. EU ABS are paying floating rate coupons – a neutral hedge against rising rates - which is another advantage of this asset class. Identifying credit risk within ABS structures is the key to YCAP’s asset selection process by considering a combination of a sophisticated quantitative and qualitative analysis. For its quantitative ABS analysis process, YCAP AME uses Intex Solutions Inc. (Analytical Software for Global Structured Finance) as database and analytic tool for cash flow modelling and pricing.
Creating value from credit based on the combination of a fundamental forward-thinking, active and risk-sensitive management is a guideline of our acting.
YCAP stands for dedicated and active asset management committed to excellence in delivering stable returns with corresponding risk. We actively manage risk and return across a broad range of investment opportunities. The credit universe covered by YCAP is split into industrial sectors which are subject to the responsibility of the dedicated team members in their function as credit analysts of the company.
The investment strategy and asset allocation process combines the Top Down drivers (macro-economic fundamentals) with the Bottom Up selection (fundamental research for individual names). Based on this assessment, we merge a strategic forecast with tactical views and market trends. In an extensive allocation process we identify our strategic allocation for the group’s credit market coverage, considering for example duration, yield curves, attractiveness of each asset class and industry sector in terms of relative value. Even if changing market trends could influence short- to medium-term allocations immediately, YCAP is always guided by its own evaluation in terms of relative value and risk of default of all types of credit. Based on these analyses and filters for the overall credit universe, YCAP defines its investment universe / a group of attractive and eligible credits and is able to build a well-performing and stable portfolio upon fund strategy respectively client request.