Fixed income
A unique approach aimed at obtaining cash flow through higher-yielding corporate bonds... ...this is the main objective of our Fixed Income investment strategy.
Fixed Income securities have a unique advantage: guaranteed cash flow and return of capital. That’s why many investors prefer bonds and almost every portfolio has some.
Bonds allow for precise cash flow management and forecasting, which is often needed and much appreciated by investors. Predictability will enable them to plan around guaranteed coupon payments and capital repayments, which is even easier if they use the interest rate calendar we supply our clients.
It is undoubtedly convenient to know in advance when returns will “materialise” in the form of coupon payments, as it is beneficial to anticipate the return that a portfolio may generate in a calendar year. In addition, knowing the timing of repayments in advance allows for appropriate planning – for example, with the intent of using the capital in another investment or financing the purchase of a house or a boat. Some of our clients use this cash flow to supplement or replace their income, and some simply like the stability and security a guaranteed income stream can provide.
The security offered by fixed income securities is also unique: the issuer is obliged to pay interest and repay the principal, and if they fail to do so, the consequences are dramatic. The issuer faces bankruptcy, whereby bondholders may take control of the underlying assets to recover some of the original investment.
The Genève-Invest-Concept
Concept |
|---|
Corporate higher-yielding bonds with the best risk/return ratio |
Systematic focus on niche themes and special events |
A continuous and foreseeable flow of income |
Legal protection for bondholders: focus on institutional and secured senior bonds |
Predictability & transparent communication with the corporate management |
Less fluctuation in value than shares and benefits of effective diversification |
Fixed high-interest coupons & reduction of yield curve risk |
Additional income by exploiting the yield curve effect |
In recent years, interest rates have fallen steadily in response to central bank policies. It is challenging for investors and some portfolio managers to find some return in the fixed income segment. It is not uncommon to come across bonds with a negative yield. For example, German 10-year government bonds have a yield of -0.287% in 2021, which means that the value of the investment is dwindling year by year, both in nominal and real terms, adjusted for inflation
The problem is that investors’ needs have not changed: People still need cash flow predictability, at least from one component of their portfolio, and understandably so. We think it is still possible to find attractive returns if you are willing to dig deeper; of course, this requires more effort, time, and resources than it used to do. Often these are niche opportunities that are not easily accessible to retail investors and, in some cases, too niche for big players such as high-profile funds.
Our job is to look for the opportunities that still exist in the market. We analyse both the primary and secondary markets in-depth and find it particularly useful to speak to management regularly better to understand the history and plans of each company. This is also beneficial in assessing real risk, as security is paramount; otherwise, all guarantees are worthless.
We strive to balance the risk by analysing each company in-depth and constantly monitoring it. We pay attention to seniority, recovery levels, different maturities in the portfolio, exploitation of market volatility and the protection that higher coupons inherently offer. We also pay attention to duration to protect our clients’ portfolios against inflation and potential interest rate increases.
We do not consider credit ratings to be an effective indicator. Although we do take them into account, we rely on our own thorough research using a model that we have developed and improved internally and that has proven effective in various market cycles. As a result, we have still managed to generate significant positive returns for our investors over the past few years, as our audited performance results can attest.
Proven invest performance and track record of our investment strategy 1
To ensure the highest level of transparency, we have analysed the actual returns of our client portfolios and had the results and methodology audited by the auditing firm BDO Switzerland (there will be another performance auditing, including the 2021 figures, in 2022 as well). Please note that the performances of all accounts are consistently calculated net of management and custody fees and the performance results are based on all of our four investment strategies.
Annualized performance for all client accounts of Genève Invest S.à.r.l. during the period of 2009 until 2020 (in Euro)*: 12-year investment performance from 1st January 2009 to 31st December 2020
*The indicated performance figures refer to the past and are not a reliable indicator of future performance results. The above-mentioned performance results are net results (after deduction of all fees but before tax) and refer to all client accounts of Genève Invest S.à.r.l., the parent company of Genève Invest (Europe) S.A. Genève Invest (Europe) S.A. is an independent company. However, it operates with the same expertise and methodology in the same investment universe. Important notice: All investment strategies involve the risk of asset reduction or loss of assets.
A unique approach aimed at obtaining cash flow through higher-yielding corporate bonds... ...this is the main objective of our Fixed Income investment strategy.
Fixed Income securities have a unique advantage: guaranteed cash flow and return of capital. That’s why many investors prefer bonds and almost every portfolio has some.
Bonds allow for precise cash flow management and forecasting, which is often needed and much appreciated by investors. Predictability will enable them to plan around guaranteed coupon payments and capital repayments, which is even easier if they use the interest rate calendar we supply our clients.
It is undoubtedly convenient to know in advance when returns will “materialise” in the form of coupon payments, as it is beneficial to anticipate the return that a portfolio may generate in a calendar year. In addition, knowing the timing of repayments in advance allows for appropriate planning – for example, with the intent of using the capital in another investment or financing the purchase of a house or a boat. Some of our clients use this cash flow to supplement or replace their income, and some simply like the stability and security a guaranteed income stream can provide.
The security offered by fixed income securities is also unique: the issuer is obliged to pay interest and repay the principal, and if they fail to do so, the consequences are dramatic. The issuer faces bankruptcy, whereby bondholders may take control of the underlying assets to recover some of the original investment.
The Genève-Invest-Concept
Concept |
|---|
Corporate higher-yielding bonds with the best risk/return ratio |
Systematic focus on niche themes and special events |
A continuous and foreseeable flow of income |
Legal protection for bondholders: focus on institutional and secured senior bonds |
Predictability & transparent communication with the corporate management |
Less fluctuation in value than shares and benefits of effective diversification |
Fixed high-interest coupons & reduction of yield curve risk |
Additional income by exploiting the yield curve effect |
In recent years, interest rates have fallen steadily in response to central bank policies. It is challenging for investors and some portfolio managers to find some return in the fixed income segment. It is not uncommon to come across bonds with a negative yield. For example, German 10-year government bonds have a yield of -0.287% in 2021, which means that the value of the investment is dwindling year by year, both in nominal and real terms, adjusted for inflation
The problem is that investors’ needs have not changed: People still need cash flow predictability, at least from one component of their portfolio, and understandably so. We think it is still possible to find attractive returns if you are willing to dig deeper; of course, this requires more effort, time, and resources than it used to do. Often these are niche opportunities that are not easily accessible to retail investors and, in some cases, too niche for big players such as high-profile funds.
Our job is to look for the opportunities that still exist in the market. We analyse both the primary and secondary markets in-depth and find it particularly useful to speak to management regularly better to understand the history and plans of each company. This is also beneficial in assessing real risk, as security is paramount; otherwise, all guarantees are worthless.
We strive to balance the risk by analysing each company in-depth and constantly monitoring it. We pay attention to seniority, recovery levels, different maturities in the portfolio, exploitation of market volatility and the protection that higher coupons inherently offer. We also pay attention to duration to protect our clients’ portfolios against inflation and potential interest rate increases.
We do not consider credit ratings to be an effective indicator. Although we do take them into account, we rely on our own thorough research using a model that we have developed and improved internally and that has proven effective in various market cycles. As a result, we have still managed to generate significant positive returns for our investors over the past few years, as our audited performance results can attest.
Proven invest performance and track record of our investment strategy 1
To ensure the highest level of transparency, we have analysed the actual returns of our client portfolios and had the results and methodology audited by the auditing firm BDO Switzerland (there will be another performance auditing, including the 2021 figures, in 2022 as well). Please note that the performances of all accounts are consistently calculated net of management and custody fees and the performance results are based on all of our four investment strategies.
Annualized performance for all client accounts of Genève Invest S.à.r.l. during the period of 2009 until 2020 (in Euro)*: 12-year investment performance from 1st January 2009 to 31st December 2020
*The indicated performance figures refer to the past and are not a reliable indicator of future performance results. The above-mentioned performance results are net results (after deduction of all fees but before tax) and refer to all client accounts of Genève Invest S.à.r.l., the parent company of Genève Invest (Europe) S.A. Genève Invest (Europe) S.A. is an independent company. However, it operates with the same expertise and methodology in the same investment universe. Please CLICK HERE for a detailed look at our Investment Performance Results (audited by BDO). Important notice: All investment strategies involve the risk of asset reduction or loss of assets.