Portfolio construction in the fixed-income strategies is based on a combination of top-down and bottom-up analysis and includes the following three pillars:
- Analysis of the macroeconomic environment
- Analysis of the three segments: government bonds, mortgage bonds and credit bonds
- Quantitative analysis on a bond level
As a first step in the portfolio construction, the duration and credit risk are determined based on the analysis of the macroeconomic environment. Secondly, bonds are selected on the basis of the attractiveness of the segments and the characteristics of the individual bonds. The emphasis on the three pillars of the portfolio construction depends on the current macroeconomic environment.
A description of the different bond segments included in the investment universe of the fixed-income department is given below. The investment guideline of each portfolio determines which of the segments will be included in the actual portfolio.
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Government bonds with “limited risk” Government bonds issued by for example Denmark, Germany, Norway and the US. The investments will often be driven by interest rate and/or currency expectations. |
Government bonds with “risk” Government bonds issued by emerging market countries, including Mexico, Brazil and Indonesia. This category also includes government bonds issued by countries outside emerging markets with high-risk premium, including Ireland. |
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Mortgage bonds Primarily Danish mortgage bonds but also European and US mortgage bonds. |
Credit bonds Credit bonds primarily issued by issuers in Northern Europe. |
Maj Invest has received several awards for the management of fixed-income strategies. Morningstar has elected Maj Invest as the best mutual fund in Denmark managing Danish bonds in 2011, 2013, 2014 and 2016.