Our objective is to generate steady positive excess return, in every market environment, while targeting capital protection by limiting drawdowns. To achieve this, we have designed an investment philosophy tailored to the CHF bonds market.
The CHF bonds market has unique characteristics such as high demand, a small number big of market participants, strategic investors, a high sensitivity to systemic risk and lower volatility compared to other fixed income asset classes. We see these characteristics opportunities for return generation. Therefore we have designed an investment style with the following characteristics.
Strategic: We focus on strategic active positions that reflect our anticipation of macroeconomic trends, systemic risk and credit events with a time time horizon of typically three months.
Strong conviction: We only implement strategies resulting from strong factual convictions. Our level of conviction and the timing on an active bet are firstly and mostly driven by fundamental research. Our discipline is to exit a position early when the level of conviction diminishes due to changes in the underlying fundamental factors.
Capital protection: We strongly focus on anticipation of credit events influencing solvency, rating and liquidity to avoid performance downside.
Cost reduction: We have low entry and transition costs thanks to an independent trading desk with no commissions, best execution principles and crossing opportunities between the portfolios.
Exclusions
CHF Bonds portfolios respect the Swiss Association for Responsible Investment (SVVK/ASIR) exclusion list the and Pictet Group exclusion list on companies active in anti-personnel landmines, cluster munition, chemical & biological weapons (including white phosphorus) and nuclear weapons from countries not signatory of the Treaty on Non-Proliferation of Nuclear Weapons (NPT). We further exclude coal extraction, tobacco, alcohol, gambling and adult entertainment with a revenue threshold of 10%.
Best-in-class
In our active products, we exceed benchmark weight only in companies with low carbon footprint. We use data from Trucost to filter the companies with low carbon footprint.
Integration
We integrate ESG factors in our credit analysis for the remaining investable companies and determine if these factors are fairly priced in the market. In our bottom-up company selection, we integrate ESG factors such as governance, controversies and accounting standards. For this purpose, we use various ESG data providers such as Sustainalytics scores and reports (covering E, S and G), ISS Governance scores and reports (covering G) and CFRA Creative Accounting reports. These ratings and reports are integrated into our portfolio management system.
ESG rating alerts have been put in place by risk management team to quickly identify a deterioration or improvement in these ratings. All teams at Pictet Asset Management have a breakdown and evolution of ESG ratings formally incorporated into their performance reviews with the Chief Investment Officer.
Engagement
As a firm, we engage with companies that do not meet our ESG evaluation criteria but have the potential to improve in order to achieve a positive outcome within a certain timeframe. Our ESG evaluation is based on a combination of proprietary and external research. We practice targeted, collaborative and outsourced engagement in addition to direct engagement during company meetings.
Pictet Asset Management has formulated a concrete process for corporates and sovereigns to positively influence ESG performance. Key criteria are the severity of ESG concern(s) and the likelihood of successfully influencing the issuer. The process is enhanced through a subscription to a third-party service provider.
In addition to the approach described above for the active and passive portfolios, the CHF bonds team has over 20 years experience in customization of portfolios using specific ESG criteria defined by the client.
Important legal information
This marketing material is issued by Pictet Asset Management (Europe) S.A.. It is neither directed to, nor intended for distribution or use by, any person or entity who is a citizen or resident of, or domiciled or located in, any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. The latest version of the fund‘s prospectus, Pre-Contractual Template (PCT) when applicable, Key Information Document (KID), annual and semi-annual reports must be read before investing. They are available free of charge in English on www.assetmanagement.pictet or in paper copy at Pictet Asset Management (Europe) S.A., 6B, rue du Fort Niedergruenewald, L-2226 Luxembourg, or at the office of the fund local agent, distributor or centralizing agent if any.
The KID is also available in the local language of each country where the compartment is registered. The prospectus, the PCT when applicable, and the annual and semi-annual reports may also be available in other languages, please refer to the website for other available languages. Only the latest version of these documents may be relied upon as the basis for investment decisions.
The summary of investor rights (in English and in the different languages of our website) is available here and at www.assetmanagement.pictet under the heading "Resources", at the bottom of the page.
The list of countries where the fund is registered can be obtained at all times from Pictet Asset Management (Europe) S.A., which may decide to terminate the arrangements made for the marketing of the fund or compartments of the fund in any given country.
The information and data presented in this document are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments or services.
Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. The management company has not taken any steps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Before making any investment decision, investors are recommended to ascertain if this investment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional.
The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested.
The investment guidelines are internal guidelines which are subject to change at any time and without any notice within the limits of the fund's prospectus. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. Reference to a specific security is not a recommendation to buy or sell that security. Effective allocations are subject to change and may have changed since the date of the marketing material.
Past performance is not a guarantee or a reliable indicator of future performance. Performance data does not include the commissions and fees charged at the time of subscribing for or redeeming shares.
Any index data referenced herein remains the property of the Data Vendor. Data Vendor Disclaimers are available on assetmanagement.pictet in the “Resources” section of the footer. This document is a marketing communication issued by Pictet Asset Management and is not in scope for any MiFID II/MiFIR requirements specifically related to investment research. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any products or services offered or distributed by Pictet Asset Management.
Pictet AM has not acquired any rights or license to reproduce the trademarks, logos or images set out in this document except that it holds the rights to use any entity of the Pictet group trademarks. For illustrative purposes only.