INVESTMENT APPROACH

The Fixed Income security selection process we employ mirrors the robust foundation of our Equity security selection process. However, Fixed Income portfolios introduce unique dynamics. These portfolios commonly encompass government bonds, widely acknowledged as risk-free investments, and the intricate shape of the yield curve, a critical factor significantly influencing returns. To navigate these complexities, we integrate additional macro analysis into our strategy.

The interplay between risk and reward is a fundamental principle across all asset classes, yet it becomes even more evident in the realm of Fixed Income assets. Crafting a well-optimized Fixed Income portfolio requires meticulous assessment of risk amidst prevailing macroeconomic conditions. We conduct a comprehensive examination of government, corporate, and individual spending patterns, as well as the extent of leverage in play. This rigorous analysis, complemented by various macroeconomic indicators, forms the foundation for our economic and interest rate forecasts. Our ultimate goal is to structure portfolios that concurrently mitigate risk and maximize returns. This involves strategically allocating resources, adjusting corporate credit and government bonds, fine-tuning duration, and managing convexity to strike an optimal balance.

In the case of corporate credit, we prioritize bottom-up analysis as the primary driver for enhancing value:

• Company fundamentals: We delve deep into aspects such as financial health, growth prospects, and competitive positioning.
• Credit risk: Rigorous assessment of credit risk is fundamental to our security selection approach.
• Relative value analysis: Our approach focuses on risk-adjusted returns, aiming to maximize the value provided by each investment.

It’s important to note that many companies in our Fixed Income portfolios are also featured in our Equity portfolios due to our consistent rigorous analysis, scrutinizing factors such as:

• Business model: We evaluate industry dynamics, competitive positioning, operating strategies, and the strength of management teams.
• Balance sheet: Assessment includes financial leverage, stability of bank credit facilities, liquidity, and default risk.
• Outlook: Factors considered comprise expected cash flow growth, capital allocation strategies, and leverage targets.
• Valuation: Comparative assessments, including credit spread analysis against historical trends and peer performance, are integral to our evaluation process.

We maintain a proactive approach to identify strategic opportunities within the market. Our strategy involves taking calculated positions to capitalize on value-added opportunities. Although our corporate bond strategy primarily targets investment-grade issuers rated BBB (low) and above, we offer tailored solutions to clients seeking exposure to high-yield securities. Throughout, we remain resolutely committed to capital preservation and diversification. Our discipline remains steadfast in seeking a high risk-reward threshold throughout the economic cycle. Bond pricing undergoes rigorous evaluation to ensure adequate compensation for investors regarding all associated risk factors before inclusion in our portfolios.

At Louisbourg, we’re dedicated to delivering optimal investment solutions aligned with our clients’ financial objectives and risk tolerances. Our meticulous, data-driven approach ensures the integrity and security of your investments, facilitating the achievement of your financial goals.