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Authors

  • July 8, 2019
    Fixed Income
    Andrew Jackson
    One year on from its launch, we ask: how has Hermes Unconstrained Credit performed?
  • May 30, 2019
    Fixed Income
    Fraser Lundie
    As the Multi-Strategy Credit hits a key milestone in June, Fraser Lundie, Head of Hermes Credit, looks back on how the strategy has fared in challenging markets since inception.
  • February 22, 2019
    Fixed Income
    Fraser Lundie
    Fraser Lundie, Head of Hermes Credit, introduces the Unconstrained Credit investment process. The strategy provides unconstrained, high-conviction investments across global credit, designed to capture superior relative value.
  • February 21, 2019
    Fixed Income
    Fraser Lundie
    Fraser Lundie, Head of Hermes Credit, introduces the Unconstrained Credit strategy, which provides unconstrained, high-conviction investments across global credit, designed to capture superior relative value.
  • December 12, 2018
    Fixed Income
    Fraser Lundie
    Disruption is changing the face of many industries: electric and autonomous vehicles are threatening traditional car manufacturers, while the penetration of ecommerce is transforming consumer services. In this issue of Spectrum, we explore how a wave of disruptive change has impacted the composition of global equity markets more severely than the high-yield bond market. We also explain the importance of active high-yield allocation to a risk-balanced portfolio in an investment landscape that is increasingly being upended by technological progress and business-model disruptions.
  • September 5, 2018
    Fixed Income
    Fraser Lundie
    US homebuilders have been hurt this year by concerns that rising interest rates could keep buyers at bay. But, as the sector continues to report strong demand for new housing, we ask: is the backdrop for US homebuilders favourable? The recent rise in interest rates – coupled with expectations of further rate hikes from the US Federal Reserve – has weighed heavily on US homebuilders this year: investors fear higher mortgage rates will weaken demand. But despite talk of a slowdown, industry fundamentals are still supportive of US homebuilders. Strength in the economy and labour market have boosted demand for housing. In Q2, US economic growth enjoyed its best performance in almost four years, increasing at an annualised rate of 4.2%, while unemployment remains low at 3.9% and job creation is solid. In July, employers added 157,000 jobs. Moreover, homebuilders’ recent robust earnings results demonstrate that demand has not been impacted by rising mortgage rates, with many reporting strong orders – an indicator of future revenue for homebuilders. Tight existing home inventory should also spur demand for new builds. Meanwhile, in a post-earnings call with analysts last month, Toll Brothers’ chief executive Douglas Yearley pointed to a structural shift towards the new-home industry – with buyers wanting to “create a one-of-a-kind custom home” rather than live in existing homes.
  • June 20, 2018
    Fixed Income
    Fraser Lundie
    As our Global High Yield, Global Investment Grade, Multi-Strategy and Absolute Return Credit strategies hit key milestones in June, we assess how they have performed since inception. The strong performance of our diversified range of high-conviction strategies since their inception has been driven by our dynamic approach to global credit: we focus on relative-value investing across the capital structures of issuers worldwide. This has resulted in an impressive track record of outperformance through market cycles (see Figure 1). To achieve this, we employ one investment process across our suite of strategies. It combines top-down allocation across the global liquid-credit spectrum with bottom-up, high-conviction security selection enhanced by ESG analysis.
  • September 14, 2017
    Fixed Income
    Fraser Lundie
    An improbable level of calm in markets has compelled investors to capitalise on low levels of volatility. Here we assess why they should actively manage risks in high-yield credit. It is important to look beyond the headline indicators of risk. Stubbornly low yields and low volatility in recent years have compelled yield-seeking investors to increase their allocations to high-yield bonds. This year the volatility of high-yield credit has fallen below that of investment-grade credit (see Figure 1). But there is no reason to believe that low volatility is the new normal. Even though market conditions are stable, investors should appreciate the latent risks.