Our scale, broad domestic client base and long-standing relationships with issuers and securities firms provide investors with strong access to Japan’s fixed income market.
Combining JGBs with high-quality credit broadens the opportunity set while maintaining disciplined risk management. Through active sector allocation, fundamental research and security selection, we seek to exploit information lags, pricing dislocations and market overreactions. Our market standing also supports sourcing and execution, helping us pursue consistent alpha and attractive risk-adjusted returns across changing market conditions. Within credit, the team are able to leverage our extensive corporate research platform to fully evaluate issuer and security quality across the liquidity spectrum.
While JGBs remain the dominant component in the Japanese fixed income market, the inclusion of high-quality credit broadens the opportunity set, enhancing diversification and return potential without materially increasing overall portfolio risk. Historically, the Aggregate Strategy has delivered a modestly higher Sharpe ratio than other Japanese fixed income approaches, making it an efficient benchmark for long-term investors. Through active sector allocation and security selection, we seek to generate consistent excess returns while maintaining a disciplined and transparent risk management framework.
Japan’s credit market is characterised by strong corporate balance sheets, conservative financial management, and a stable domestic investor base. As a result, credit quality has historically been high and default rates have remained low relative to many global markets. We view Japanese credit not merely as a source of incremental yield, but as an effective means of enhancing portfolio efficiency while preserving overall stability. While periods of market stress may temporarily affect performance, we believe that credit carry and diversification benefits can improve risk-adjusted returns over the medium to long term. Through active credit selection and fundamental research, we seek to capture these opportunities while maintaining a disciplined risk management framework.
Thorough analysis of monetary policy, market trends, and valuation dynamics is essential in identifying opportunities within the Japanese rates market. By combining macroeconomic research with yield curve and relative value analysis, we seek to identify market dislocations and inefficiencies across maturities. This enables us to adapt positioning as market conditions evolve and allocate risk to the most attractive opportunities. While carry remains a key component of bond returns, we aim to enhance performance through active position management that captures valuation anomalies and market inefficiencies.
We have extensive experience delivering customised solutions for institutional investors, including mandates incorporating specific requirements related to derivatives, securitisations, sustainability, and regulatory constraints. As our investment approach does not rely on significant exposure to derivatives or securitised assets, client-specific restrictions can typically be accommodated without materially altering the strategy’s core characteristics. Compliance with investment guidelines is monitored through multiple layers of oversight, including portfolio management, independent risk management, and compliance functions, ensuring robust governance and transparency.
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