Investment Philosophy

The Canso fixed income approach concentrates on security selection. We believe that fundamental analysis and security selection will add substantial value compared to a more "passive" approach.

Traditional "core" bond management combines corporate bonds with government bonds in an "active" bond mandate. The corporate bonds usually selected are a limited number of higher investment grade issues, which form a small portion of the overall bond portfolio. Alternatively, a portion of the bond portfolio is allocated to "high yield" management, which is exclusively invested in lower quality bonds.

The Canso Corporate Bond approach allocates a dedicated portion of the bond portfolio to corporate bonds and manages these as its own universe. The result is a diversified and well-structured portfolio of corporate bonds, with each selected on its own individual merits. The credit range of the portfolio includes all investment grade bonds (AAA to BBB) and below investment grade issues, when permitted by the client's mandate. We believe this latitude frees us from the necessity of trying to mimic index holdings and allows us to accept risks that the portfolio is compensated for. Given the risk/return tradeoff, we do not distinguish between bonds on credit rating. We move between bonds as their valuations change and tend to buy unpopular bonds cheaply and sell them into strength. We would rather buy an out-of-favour and cheap "A" bond than a highly sought after and overpriced junk bond.