Investment Process

Our investment approach seeks to generate alpha through multiple investment strategies while carefully managing risk through diversification. We believe that accurate and transparent risk measurement is fundamental to making intelligent investment decisions and producing the anticipated return outcomes.

We customise our investment approach by switching on or off, or scaling, our broad investment strategies – credit, interest rates and arbitrage.

Within each of these strategies we can further diversify a portfolio by implementing multiple trade ideas. Trade ideas are also tailored to meet specific investment needs.

  • Efficient benchmark replication: By choosing or creating a relevant benchmark and then replicating this benchmark, we form a base from which we can build our performance-enhancing strategies. We believe that choosing or creating the correct benchmark is vital in ensuring that the objectives of the client are met, and that the manager is held accountable for the risks taken to achieve these objectives.
  • Alpha generating strategies: Our investment returns are centred on three distinct investment strategies – credit, interest rates and arbitrage. Each of these are managed independently within our overall risk framework.
  • Portfolio construction: Strategies and trade ideas are passed through risk and compliance checks before being included in any portfolio. A risk-based optimisation process ensures that portfolios remain in line with strategic views, and consistent with client mandates and investment needs.

Our approach to Environmental Social and Governance (ESG)

Ardea’s primary purpose is to achieve the best risk adjusted returns for our clients.  We believe that incorporating ESG considerations within our investment process helps us to achieve this.  We assess the materiality of ESG issues for investment decisions and then determine what impact this will make to the portfolio.

Ardea believes that ESG megatrends can affect important drivers in the economy which in turn, can have a material impact on bond market returns in the longer term.  We therefore incorporate ESG considerations into our macro portfolio positioning.

Understanding ESG issues has always been an implicit part of Ardea’s qualitative fundamental risk assessment for credit investing.  Indeed, we believe that incorporating ESG into our investment process is our fiduciary responsibility.

For more information on our ESG philosophy and process please refer to our ESG Policy.