The Nikko AM Global Credit strategy is actively managed using fundamental top-down and bottom-up credit research to create diversified portfolios. The strategy draws on fundamental credit analysis as the primary contributor of returns and complements pure credit selection and credit allocations with other drivers, including currency and interest rates.
The investment team believes Credit is most effectively managed within a global context, allowing fundamental research to determine asset allocation and security selection, tempered by awareness of the asymmetric risks of credit exposures.
We do not have a home bias; nothing pre-occupies portfolio construction - our well-established fixed income teams in Europe, Singapore and Japan allows the Global Credit team to develop a holistic and balanced view by drawing on local expertise and on-the-ground research of these teams.
We employ a pragmatic approach and deploy our resources to areas where we see value.
We are innovative. Credit research and Risk Management are supported by proprietary quantitative models which allow us to focus on alpha generating ideas.
We are communicative. Regional teams communicate both formally and informally to share information and research. This additional insight allows the team to execute quickly once they have made a decision.
Insights
Collaboration
Diversity
Quality Research
Issue Selection
Interest Rate Forecasting
Currency Management
Head Portfolio Manager - Global Credit, CFA
Prior to Nikko AM, Holger worked at Lazard Asset Management and held a variety of roles based in both Frankfurt and London and was Lead Portfolio Manager for their European Corporate Bond Portfolio. Before Lazard, he worked for Deka Investment Management where he was a Fund Manager/Analyst in Corporate Bonds.
Holger began his career at DG Bank as a Fixed Income Trade and Sales assistant. He holds a Masters in Business Management and Economics from the Frankfurt School of Finance & Management and is a CFA® Charterholder.
The Global Credit team is comprised of six investment professionals headed by Holger Mertens and supported by Steve Williams, Ee-Yung Yip, Marco Sun, Batin Ozkurt and Linda Luo. The team sits within the wider Global Fixed Income team based in London, and consists of 12 investment professionals with extensive investment management experience.
The London team has significantly broadened its capabilities over time to develop tailored solutions for global institutional clients. One of the team’s core differentiators is their fluid interaction and ability to execute decisions quickly across five categories: Global Credit, Currency, Core Markets, Emerging Markets and Research & Solutions. The diagram below illustrates the organisational structure of the London-based Global Fixed Income Team:
Global Credit also draws upon regional insights from Nikko AM’s credit specialists located in Europe, Singapore, New Zealand and Japan and there are 23 dedicated credit investment professionals in Nikko AM’s global investment network.
The Nikko AM Global Credit Strategy was launched in August 2016 and is the flagship Global Credit strategy with wide investment powers permitting the Head Portfolio Manager to use discretion, showcasing Nikko AM’s broad credit capabilities. The portfolio is actively managed by Holger Mertens and his team using fundamental top-down and bottom-up credit research to create a diversified portfolio. The strategy aims to achieve a competitive absolute and relative return while managing risk. Key features of the strategy are detailed below:
Draws on fundamental credit analysis as the primary contributor of returns
Approach complements pure credit selection with other drivers, including currency and interest rates
Average number of issues: 70-120
Over a full credit cycle aims to achieve average annual return
Target 1.5% outperformance over the Barclays Global Aggregate Corporate Index
Aims for absolute positive return of 4% over a longer term horizon (target return is gross of management fees, performance fees and custodial fees, but net of all trading commissions.)*
Targets tracking error of 1-3%
Maximum high yield exposure of 30%
Risk divided into systematic and unsystematic components
*Target return is an expected level of excess return based on certain assumptions and/or simulations taking into account the strategy’s risk components. There can be no assurance that any stated investment objective, including target return, will be achieved and therefore should not be relied upon.
The team continually reviews its product line to develop innovative strategies that are focused on higher yielding and higher credit quality solutions, which meet client needs for positive yields. Current AUM is approximately USD 8.5 billion.
Investing on an opportunistic basis
Exploiting a broad range of market inefficiencies
Portfolio flexibility to weather different market conditions
Global - 2016
US Investment Grade - 2016
European High Yield - 2014
European Investment Grade - 2018
Non Preferred Senior Bonds - 2019
MREL (Minimum Requirement Eligible Liabilities) – 2019
US High Yield - 2020
European Corporate Hybrid – 2020
Multi Asset Credit - 2022
Global economic, credit and interest rate cycles are becoming desynchronised - in one market we could see spreads widening and leverage edge up, while in another observe the opposite....
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