To keep pace with the fast-changing markets, the AllianzGI income and growth investment team not only considers a company’s past performance, but also conducts in-depth analysis with forward-looking indicators to identify “Rising Star” companies.
The AllianzGI income and growth investment team adopts a one-of-a-kind approach of diversification. The team examines the target company’s capital structure to select the best vehicle to invest in the enterprise among its different asset classes. This integrated process is a contrast to traditional multi-asset strategies, which have separate units to oversee equity and bond picking – this specialised process can incur name concentration risk, as both units may decide to invest in the same company.
Since its inception in 1994, the team has created a proprietary “Upgrade Alert Model” that employs eight factors for companies’ operational analysis. A wide range of income, cash-flow, balance sheet indicators, including profit margin and financial leverage ratio, enable the team to thoroughly examine the company’s capital structure, and generate reliable market forecasts.
Based on the operational analysis outcome, the team will deliberate upon which asset class would best capture the company’s potentials. For instance, among the positively-rated companies, the team will inspect the performance of its stocks, bonds, and convertibles, and select the best investment instrument. This strategy not only could efficiently capture a company’s potential growth, but also diversifies risk by spreading out the investments into multiple industries.
Looking ahead, income and growth strategy will continue to unearth investment themes and growth opportunities for investors. It strives to tailor to investors’ needs through a diversified asset allocation, and a variety of base currencies and dividend policies.
* Margins includes EBIT margin, EBITDA margin and gross margin.
To keep pace with the ever-changing global economy, the AllianzGI income and growth investment team not only considers a company’s past and current performance, but also actively looks out for new opportunities under different investment themes. As early as the 1990s, the team went above the mainstream equity-focus investment strategy as it pioneered into the high yield bonds market, which offered ideal growth potentials and much lower volatility.
To select high yield bonds, the team analyses its Upgrade Alert Model’s eight factors to identify “Rising Stars” debt issuers with the prospect of a future credit rating upgrade. The team’s high yield bonds strategy has achieved remarkable results: the selected debt issuers have an upgrade-to-downgrade ratio of 2.2, outperforming the market average of 0.8 (Refer to the chart on the right).
* As tracked by AllianzGI; includes ratings actions by either Moody's or Standard & Poors. ** As tracked by Moody's Investor Services from 1995 to 2009 and by JP Morgan (sourcing Moody's Investor Services) from 2010 to 31 December 2019.
Source: Moody’s, Standard & Poor’s, JP Morgan, AllianzGI, as of 31 December 2019. This is not a single-fund strategy. All information is for illustrative purposes only, and should not be interpreted as recommendations or investment advice. Past performance is not indicative of future performance.