Standard Life Investments

Investment process

The Absolute Return Bonds portfolio benefits from the combined expertise of our fixed income and multi-asset investing teams. In choosing portfolio strategies, we integrate our rigorous fixed income investment process with the portfolio structuring and risk management experience of our multi-asset specialists.

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Idea generation

We generate investment ideas from the macroeconomic themes developed by our multi-asset investing team. We also include the tactical investment strategies that have been adopted by our fixed income specialists.

To select strategies, we follow a rigorous investment process involving a range of investment techniques, including fundamental macroeconomic analysis, quantitative research and valuation modelling. Strategies are then assessed from an expected risk, return, diversity and liquidity perspective. In addition, our risk experts analyse all ideas to understand the risk impact of a new strategy, both in isolation and on the portfolio as a whole.

Selection

Proposed strategies are reviewed and approved by our Bond Investment Group, our decision-making forum which provides expert qualitative assessment and complements the stringent quantitative analysis of our risk team. The Bond Investment Group bases its approval on three criteria:

  • conviction in its return potential
  • its effectiveness in mitigating risk
  • its liquidity and scalability.

Implementation

We implement approved investment strategies efficiently and effectively using conventional market instruments, e.g. direct investment and derivatives. The portfolio managers also make active asset allocation decisions and ensure the portfolio at all times meets robust risk management constraints.