Swan fixed income investment philosophy is based on a proprietary version of the Unified Approach, a blend of Total Return and Asset Liability Management.
Started in 2008, the method has produced positive returns all years, significantly higher than EURIBOR, in combination with extremely low volatility. A buy and hold strategy (the Yield Type strategy) and a number of Active Strategies are combined in order to generate 3 different risk-reward profiles. The result is a range of products able to match our client needs, from income generation to strong capital appreciation. The Yield Type strategy primary objective is the generation of current yield. Depending on the risk profiles of the investment vehicle (conservative, intermediate, high yield), the promised excess spread generated from the Yield Type strategy can be retained in the portfolio or used to finance the active strategies.
Conservative Risk Profile - minimum return : EURIBOR 3m + 150
The Conservative Profile is focused on Income Generation and applies only a limited amount of Active Strategies, typically Interest Rates and Currencies of developed countries. Only the promised average spread over risk free rate generated by the Yield Type portfolio is invested in Active Strategies. Consequently, barring significant credit events, we believe we can systematically achieve positive returns over a 12 month period, irrespectively of market conditions. The target of the Conservative Profile is the generation of a minimum return net to the client of EURIBOR + 1.50% per annum. Since inception the achieved range of excess returns over EURIBOR for the profile has been between +1.5% and +2.5% net to the client.
Intermediate Risk Profile - minimum return : EURIBOR 3m + 250 / 350
The Intermediate Profile is focused on the optimal equilibrium between income generation and capital appreciation. The Credit Allocation Scoring (CAS), a proprietary multifactor model, is applied weekly to determine the allocation of active strategies, typical of a Credit Total Return fund. Majority of investments are in the following fixed income markets: Corporate Emerging and Global High Yield. All the income generated by the Yield Type portfolio, which in this profile is made mainly of high yield bonds, can be invested in active strategies. The target of the Intermediate Profile is the generation of a minimum return net to the client between LIBOR + 2.50% and 3.50% per annum. Since inception the achieved range of excess returns over EURIBOR for the profile has been between +2.5% and +3.5% net to the client.
High Reward Risk Profile - minimum return : EURIBOR 3m + 450
The High Reward Profile is focused on the achievement of significant capital appreciation with average volatility. The Yield Type strategy is deployed with a degree of leverage (2x-3x) mainly within high yield names. The target of the High Reward Profile is the generation of a minimum return net to the client of LIBOR + 4.50% per annum. Since inception the achieved range of excess returns over EURIBOR for the profile is between +3.50% and +4.5% net to the client.