Investment Process The licence to perform
Ignis Corporate Bond Fund
Fund management Fund overview
Chris Bowie is lead manager of the Ignis Corporate Expertise: lead manager Chris Bowie, head of credit, has 17
Bond Fund and head of credit at Ignis. years’ investment experience, working as part of Ignis’ extensive
Management of the fund is carried out as part of and experienced fixed income team
the broader Ignis fixed income process with Best ideas: the Ignis team includes sector and macroeconomic
extensive resource and the support of specialists Chris Bowie specialists, allowing the fund manager to pick the best of the ideas
from across the business. The Ignis fixed income team is responsible generated
for approximately £43bn* in assets under management. On the Flexible alpha generation: top-down and bottom-up
Ignis Corporate Bond Fund Adam Walker supports Chris at a approach with multiple dimensions for ‘through the cycle’ investing
portfolio management level, while David Meade, head of credit Proprietary research systems: unique systems operating
research, and his team of nine, provides extensive credit analysis since 2004, includes credit research and relative value tool
informing the portfolio management process.
Fund aim of investment strategies, funds and client mandates. The Ignis
team has significant investment experience and is made up of
Ignis Corporate Bond Fund
specialist managers and analysts with complementary skill sets.
The fund aims to achieve top quartile performance versus the
IMA Sterling Corporate Bond Peer group. It achieves this via
The 30 plus strong team operates under the guidance of Ignis
income and capital growth from investing in fixed-interest
CIO for fixed income, Chris Fellingham. Chris joined Ignis in
securities (Corporate Bonds and Gilts). The fund can invest up to
January 2010 having previously worked for George Soros’
15% of its investments in fixed-interest securities outside the UK,
London Asset Management business where he was CEO/CIO from
with the currency hedged back into Sterling. The investments are
late 2007. Prior to this Chris spent 12 years at BlackRock/Merrill
actively managed to produce a stable level of income (which is
Lynch Investment Management/Mercury Asset Management
paid out every three months) and capital growth. The focus is
where he was head of London fixed income.
mainly on investment-grade (lower risk) corporate bonds, where
a higher yield and return is available than from gilts.
Under Chris’ leadership, the successful individual parts of the Ignis
fixed income business have been brought together to form an
efficient, dynamic team split into areas of specialism. Each
The Ignis fixed income team portfolio manager is given the freedom to follow their conviction
The Ignis fixed income product offering is extensive, with a total when investing, or the ‘licence to perform’, while benefiting at all
of £43bn* under management. This is held within a wide range times from the full support of the broader Ignis fixed income team
*Source: Internal at 30/09/10.
Team structure Chris Fellingham
Russ Oxley Brian Jack David Meade Chris Bowie Matthew Porter Business Support
Rates Liquidity Credit Research Credit Portfolio Specialist Fixed
+3 9 analysts Simon Mungall +1
Adam Walker Volatility x2
Quantitative Models x2 Institutional Clients
Sovereign Fixed Business Management
Income x4 Darren Evans
Ignis Corporate Bond Fund
and operating subject to stringent risk controls and checks. The Ignis in 2004 as head of credit. He oversees a team of three
structure allows individuals to contribute wholly to the process, with portfolio managers who have responsibilities split by mandate
accountability and remuneration attributed accordingly. type. Previously he worked at AEGON, where he was Head of rates,
and Murray Johnstone as a senior fixed income fund manager.
The credit portfolio management team is headed by Chris Bowie, Adam, who has 13 years’ investment experience, joined Ignis in
while David Meade is head of the credit research team. The Ignis 2000 after three years with Barclays Stockbrokers.
rates team is headed by Russ Oxley, and includes Ignis chief
economist Stuart Thomson. Matthew Porter heads the specialist side Analyst role
of the fixed income business, including volatility, liability The role of the analyst is to provide fundamental, proprietary,
management and secondary lending, while head of multi manager bottom-up analysis of individual credit securities and industries.
Simon Mungall works closely with the team on asset allocation calls. Detailed relative value analysis is performed and a credit view and
investment recommendation produced, which is then discussed
with the portfolio management team. Analysts are responsible for
The Ignis credit team continuing research on holdings and are tasked with pro-actively
The credit team manages approximately £14bn* in funds and highlighting any changes to their view and discussing any
specialist mandates, including the Ignis Corporate Bond Fund. The recommendations for portfolio actions.
team includes dedicated portfolio managers and research analysts
based in London and Glasgow. These teams work closely together There are currently nine analysts working under David Meade in
to produce ideas for inclusion within the portfolio from which the the Ignis credit research team. The team members have an
portfolio managers select the best. The team shares a common average of 10 years’ experience. David has 25 years’ investment
credit investment philosophy, which can be summarised by the experience having previously worked at Fidelity Investments in
following core beliefs; London, where he was Director of credit research, at Morgan
Stanley International as a senior credit research analyst and at
• Credit markets are not perfectly efficient and pricing inefficiencies Standard & Poor’s as a rating analyst.
exist that can be exploited to the clients’ advantage
Two disciplines, one team
• The asymmetric risk profile of credit requires a detailed, Credit Research Portfolio Management
fundamental, bottom-up analysis of individual companies Analysts cover 40 – 50 names in Trade ideas across currency, sector
2 -3 sectors and credit rating
Assessment of risks and rewards across
• Credit portfolios should take credit risk and ideally have their Direct 1 on 1 meetings
the whole investable universe
entire interest rates exposure separately managed Maintain ﬁnancial models, research
history and recommendations Asset allocation and stock selection
• Dividing the team into the discrete disciplines of portfolio Full analysis of credits and industries Focus on relative value decision making
management and research is an effective way to enhance fund Valuation analysis and tailoring to Industry reviews and company meetings
performance client requirements
Regular meetings to discuss ideas, Regular meetings to discuss ideas,
events, strategies events, strategies
Idea generation & research
As indicated above, Ignis has dedicated portfolio managers,
working with Chris Bowie, and a team of credit research analysts, The successful interaction of the credit analysts and portfolio
headed by David Meade. The separation is designed to provide managers is key to the success of the Ignis Corporate Bond Fund.
optimal use of the specialisations within the credit investment The team conducts a structured series of meetings throughout the
process. Although each group is a distinct discipline, the teams month, as well as more informal ad-hoc discussions, in order to
work closely together in determining suitable fund investments. transmit investment ideas and explore themes that will drive
returns in credit markets over the investment horizon.
Analysts undertake detailed financial research on each of the
The portfolio managers are responsible for overall portfolio
bonds under consideration and include modelled forecasts of
construction. This is driven by a top-down macro view for the
likely credit evolution. Each analyst covers 40 to 50 names,
asset allocation within the fund and also determines the rates
typically in two to three sectors. The Ignis credit team has
positioning for the fund. They also work closely with the analysts
developed its own internal systems that allow the analysts and
on making relative value decisions at a stock and sector level.
portfolio managers to record and access information efficiently.
These systems include proprietary financial databases, models and
The Ignis Corporate Bond Fund is run by Chris Bowie and Adam
Walker. Chris, who has 17 years’ investment experience, joined
The licence to perform
Communication is key to the success of the credit process at Ignis The model splits sectors to a high level of granularity. For example
with the in-depth work conducted by the analyst team informing the banking sector is split by its constituent capital structures such
portfolio management on an ongoing basis. These views are as Tier 1, Upper Tier 2, Lower Tier 2, senior etc. The model is in
continually tested and challenged through a structured most cases adhered to by the portfolio managers but if they have
communication process. The formal process begins with a monthly a strong view that an under or overweighting should be
credit strategy meeting when the portfolio management and implemented in a particular portfolio, for example the Ignis
credit research teams meet to discuss themes and the drivers of Corporate Bond Fund, this can be implemented, with the approval
likely near-term sector performance and debate sector allocation. of Chris Fellingham. This can be reflected with relative under or
This meeting then feeds into direct discussion on individual overweight positions, although the portfolios will never be
portfolios and possible changes to current holdings. Daily, weekly, diametrically opposed i.e. with long versus short positions. The
monthly and ad-hoc meetings are carried out to ensure all areas of fund manager, Chris Bowie in the case of the Ignis Corporate Bond
the fixed income team contribute to the decision making process. Fund, retains final responsibility for the asset allocation decisions
on the fund.
Informed decision making
1. Filter the noise 2. Test the hypothesis 3. Challenge the strategy Stock selection
Daily Meetings Weekly Meetings Monthly Meetings Ideas for the inclusion of a credit in a portfolio can come from
either a portfolio manager or an analyst. Analysts are directly
8:30 Macro call Sector allocation updates Broad thematic debate
engaged in seeking out and promoting investment ideas to the
9:30 Credit call Sector risk review Strategy formulation portfolio managers, being explicitly tasked and incentivised to
Corporate Earnings, News etc Sector or thematic Macro risk review
promote good credit ideas.
Risk budgeting across
M&A Consistency check
multiple dimensions Stock specific opportunities, coming either from a new issue or
Spread Moves Ratings review “What if” scenarios
the identification of an attractive idea in the market, begin with a
thorough understanding of the credit. This is undertaken by the
relevant analyst and the opportunity is then discussed with the
Portfolio construction portfolio management team with a recommendation as to
whether the idea should be considered or declined.
The Ignis Corporate Bond Fund investment process is a pragmatic
and flexible one, and recognises that different market
For a new name, the analyst will conduct a thorough review to be
environments will reward different approaches. As such, the
supplemented by a meeting with management. The analyst will then
interplay between top-down themes and bottom-up stock
prepare a summary paper of the credit’s fundamentals – business
selection will change as the market changes.
lines, history, ownership, competitive position, financial condition,
capital structure and key risks. The research will also include a review
Individual years can have very different drivers. For example 2008
of the expected future credit path, a discussion of the potential
and 2009 were dominated by getting sector and stock selection
future risks, respective probabilities and a detailed relative value and
correct. However, in previous years such as 2005, where volatility
peer group analysis. The team will then discuss the credit with the
in credit spreads was lower, the rate position was the biggest
ultimate decision made by the portfolio manager.
contributor to performance. This demonstrates the need for
expertise across all parts of fixed income.
The Rates team uses a unique process of managing its portfolios as
positions against an internally constructed forward rates curve. The
From the formalised programme of meetings, the Ignis fixed income
internal system Clearcurve constructs a risk free yield curve from the
team maintain a model portfolio specifying sector
universe of existing government bonds. This allows the curve to be
overweights/underweights. This is formally set at the monthly
broken down into key forward rates. By using forward rates instead
meeting based on input from all key members of the team. It can,
of duration to manage risk and exposures, the Rates team is able to
however, be altered at any point intra month with the process
express multiple independent views on the curve. The process arms
recognising the need to act in a dynamic, timely manner in response
the team with a more accurate way to measure the risk of a bond
to market and economic shifts.
position allowing them to minimise the risk to the portfolio and an
opportunity to generate higher risk-adjusted returns.
Ignis Corporate Bond Fund
Risk monitoring provides an extremely comprehensive breakdown of risk in
the portfolio, at both a stock-specific and sector level. It can
In addition to the oversight of the product by the fund manager
also assess the impact of new trade ideas on the portfolio,
and the wider fixed income team, there are a number of
adding a powerful extra dimension to idea generation and
independent processes in place to ensure that the portfolio
portfolio construction. EM Applications also has a stress
adheres to mandate guidelines, and the active risk taken reflects
testing facility, which allows the manager to see how his
the fund management view.
portfolio would fare under certain scenarios, based on
Ignis’ independent risk management team supplies the fund
manager with management information from a range of
Sentinel, a state of the art automated trade monitoring system,
sources. As well as real time performance information, the
provides an automated check and mandate monitoring service.
manager can also see how that performance is being
Ignis’ compliance team also constantly monitors and supervises
achieved and the levels of risk being taken within the
the investment team. The team maintains all investment
portfolio. The risk team has recently upgraded their
procedures and reviews risk control information to ensure
modelling system to EM Applications. This programme
tolerance within mandate restrictions.
Fund Management Team
Portfolio management Credit research
Chris Bowie – Head of Credit Portfolio Management David Meade – Head of Credit Research
Investment experience: 17 years Credit investment experience: 25 years
Chris joined Ignis in 2004 as Head of Credit. He oversees a David joined Ignis in August 2008 as Head of Credit
team of three portfolio managers who have responsibilities Research. He oversees a team of nine people. Previously, he
split by mandate type. Chris is responsible for the largest life spent five years at Fidelity Investments in London, where he
company mandates and the retail Corporate Bond Fund. was Director of Credit Research, responsible for a team of
Previously he spent four years at AEGON in Edinburgh where analysts following Investment Grade and High Yield credits.
he was Head of Rates. Prior to that he spent six years at Previous to that position, he spent nine years as a Senior
Murray Johnstone as a senior fixed income fund manager Credit Research Analyst at Morgan Stanley International and
covering international government bonds and sterling four years as a Rating Analyst at Standard & Poor’s. He began
credit, and before that was a programmer with National his career in commercial banking.
Australia bank for two years.
David graduated from Cambridge University with an MA in
Chris graduated from Strathclyde University with a BA (Hons) French & German. He is also a Chartered Financial Analyst.
in Economics. He is also an Associate of the Society of He has worked in London, New York and Hong Kong.
Adam Walker – Credit Portfolio Manager
Investment experience: 13 years
Adam graduated from Strathclyde University in 1997 with
an MSc in Operational Research after gaining a BSc in
Aerospace Engineering. He joined Ignis Asset Management
after three years with Barclays Stockbrokers. Adam also
covers the retail Corporate Bond Fund together with other
life company mandates and the Bothwell range of funds.
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This information is intended for professional clients and investment professionals only and
should not be relied upon by retail investors.
Past performance is not a guide to future performance. The value of investments and the income of them can
go down as well as up and is not guaranteed. Ignis Asset Management is the trading name of the Ignis Asset
Management Limited group which includes Ignis Fund Managers and Ignis Investment Services Limited. Issued by
Ignis Investment Services Limited.* Registered in Scotland No. SC101825. Registered Office: 50 Bothwell Street,
Glasgow G2 6HR. Telephone: 0141 222 8000. Product provider: Phoenix Life Limited.*
*Authorised and regulated by the Financial Services Authority. D4.10.10