The primary objective is to enhance investment opportunities by using a risk-based portfolio construction methodology. The investment process is based on a rigorous global top-down approach that actively allocates risk across several investment tools, including: duration management, country and yield curve positioning, sovereign bonds and credit allocations.
During normal periods these generally have low correlation and improve portfolio diversification. The investment team conducts a bottom-up analysis for bond selection to further align risk control with expected returns. The fund also follows a socially responsible approach to investing.
The first step in the investment process is to determine the overall macro-economic outlook using top-down directional and relative value views on most developed and developing government and corporate bond and currency markets. Second, a model portfolio is built to provide a risk allocation template. The team's focus is to enhance portfolio returns and simultaneously reduce potential risk. Lastly, portfolio positions are implemented through cash, bonds or derivatives, with the portfolio management team managing the allocation tactically to supplement the top-down risk allocation with bottom-up bond selection. The combination of top-down and bottom-up allows the team to focus on full business cycle management - allocating from one asset class to another, tapping into value wherever it exists.
Global equities
The primary objective is to select developed markets stocks that pay higher and more sustainable dividends than their sector's average. The investment process begins with a number of filters to ensure only the most liquid and ESG friendly companies within the MSCI World Index are eligible. The Amundi investment team assesses and ranks global companies from the bottom up based on key criteria such as high operating efficiency, high profitability and low or no debt. The top 50% highest dividend paying stocks in each sector are then selected.
The second part of the investment process is at the portfolio construction level to reduce concentration risk and correlation between stocks. Concentration risks are mitigated through limits on stock, sector and geographic weights. Correlation risks are evaluated through a portfolio optimization tool that identifies stocks that have a low correlation with one another. Stress test risk monitoring is conducted to ensure that inherently riskier sectors are within acceptable limits.
