Payden Absolute Return Investing: an attractive liquidity option
The Payden Absolute Return Investing (PARI) strategy is designed for investors seeking traditional asset classes with incremental returns, limited downside risk and reduced correlations. The approach is based on a multi-sector portfolio of global government and corporate bonds, securitized bonds, and emerging market bonds. The strategy can move dynamically between different sectors and individual securities to add value while achieving a target return of 2–3 percentage points above EURIBOR, for example. Investors benefit from a wide range of investment opportunities as Payden & Rygel experts take advantage of the most favorable risk-adjusted investment options from each bond sector, depending on the market situation and fundamental assessment. Particular emphasis is placed on risk management and limiting potential downside risk.
Characterisitcs of the strategy
“Best ideas” approach: Being unanchored from traditional benchmarks allows Payden & Rygel the flexibility to search for attractively valued assets. The result is a "best ideas" portfolio reflecting what Payden & Rygel's experts believe to be the most promising investment opportunities on the bond market. In this approach, the two portfolio segments "stability" and "opportunity" are weighted differently, depending on the market situation.
Fast response time: Investors remain flexible to take action in a variety of different scenarios due to broad diversification in the bond segment and the very short duration in the portfolio.
Fundamental research: Research drives investment decisions: Payden & Rygel's experienced analysts evaluate potential investment opportunities according to a variety of fundamental criteria and then aggregate the ratings from the different specialist teams into an overall score. Quantitative methods are not used. Decisions for selecting individual securities are based on the results of this strictly fundamental analysis.
Integrated risk management: Payden & Rygel's experts have designed the strategy taking extreme market conditions into account. While most managers assume “normal” markets, Payden & Rygel’s strategy has integrated a risk management system that assumes extreme market conditions as a base case.
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