Corporate credit investment according to IVO Capital Partners: Combining stability and opportunism
In bond investing, stability is often the watchword for credit investors, who see volatility as an obstacle to "carry" strategies. At IVO Capital Partners, however, volatility is seen not only as a challenge, but also as an opportunity. Our expertise, analytical skills and process enable us to adopt an opportunistic approach, when other market players retreat into a defensive posture.
Investing in corporate credit, particularly in emerging markets, requires a careful balance between the quest for stability and the ability to seize opportunities that emerge during major market fluctuations. At IVO Capital Partners, this dual orientation, combining the stability provided by "carry" with opportunistic reactivity, forms the core of our investment approach.
With over a decade's experience in the bond markets, and in emerging market debt in particular, we focus on stability by rigorously selecting corporate bonds offering solid "carry" potential. For example, our IVO Fixed Income fund targets emerging market corporate bonds, mainly denominated in hard currencies such as the US dollar and the euro, while hedging against currency risks. This strategy enables us to exploit the structural inefficiencies of these markets, while remaining selective in terms of credit risk and cautious in the face of interest-rate fluctuations.
The concept of "carry" in credit, which refers to the interest yield generated by holding bonds over a given period, is essential to our approach. The stability it provides, particularly in volatile market environments, is a cornerstone of our strategy. We build our portfolios to ensure stable income by focusing on bonds offering attractive yields and solid fundamentals. The performance of our IVO Fixed Income fund bears witness to this: in July 2024, for example, it outperformed its benchmark index thanks to strategic exposure to sectors such as Brazilian and Indian companies, which proved more resilient to market turbulence.
However, at IVO Capital Partners, we know that stability alone is not enough. We also position ourselves to act opportunistically when market conditions change, particularly in times of stress when other investors adopt a defensive posture. This was particularly visible during periods of market stress, such as the COVID pandemic or government changes in Latin America, when we strategically adjusted our portfolios. We capitalized on undervaluations and market dislocations by acquiring corporate bonds with strong cash generation and deleveraging prospects at attractive valuations. Our opportunistic approach is not limited to buying undervalued assets, but also relies on precise timing of market entries and exits to maximize returns.
This strategy, which combines stability and opportunism, is reinforced by IVO Capital Partners' in-house resources, including a robust research process and an investment team with experience of managing through several market cycles. Our ability to rapidly adjust portfolios in response to macroeconomic developments or changes in credit conditions enables us to protect capital and increase returns for our investors. For example, in response to the recent period of rising interest rates, we have adopted flexible duration management, ensuring that our portfolios are not excessively exposed to interest-rate risks, while capturing high yields on emerging-market debt.
In conclusion, at IVO Capital Partners, we have developed over the years a credit investment strategy that combines "carry" stability with opportunistic reactivity. This dual approach enables us not only to protect our portfolios in turbulent times, but also to take advantage of market overreactions, delivering solid, risk-adjusted returns for our investors.
