Download Canadian Investment Grade Corporate Fixed Income Strategy

Factsheet
March 31, 2017
Canadian Investment Grade Corporate
Fixed Income Strategy
Investment Philosophy1
We believe that there are ‘pockets of value’ in the Canadian investment
grade corporate bond market. Thorough credit and curve analysis enables
us to identify and exploit these pockets of value in the pursuit of long-term
returns, while minimizing downside risk. Within this conservative framework
we apply our creativity to generate innovative investment ideas, and develop
state of the art portfolio management techniques, allowing us to remain at
the forefront of the investment industry.
Style:
Credit
Strategy Inception:
April 1, 2000
FTSE TMX Canada
Corporate Bond Index
Benchmark:
Investment Process2
Identify Attractive
Industry and Quality
Sectors
Macroeconomic
Analysis
 Assess macroeconomic
factors
 Fiscal & Monetary
Policy
 Business and credit
cycle stage
 Default forecast
 Ideas come from
multiple sources
 Portfolio Managers/
Research Analysts
 Sell side relationships
 Industry sources
 Assess long-term
industry trends and
catalysts
 Evaluate industry
risks
 Identify industry
sectors that offer
compelling relative
value
Issuer Due
Diligence and
Security Analysis
 Default risk
minimization through
in depth credit
research
 Seek to identify the
most attractive part of
the capital structure
 Identify securities
with attractive riskreturn profiles
 Index screens
 Relative value
analysis
Disciplined Portfolio
Construction
 Diversify across
industry sectors and
issuers
 Actively manage
credit exposure to
benefit from evolving
risk environment
 Total return approach
with an emphasis on
income generation
and capital
preservation
Stringent Risk
Management
 Monitor and seek to
eliminate unintended
risks
 Monitor liquidity for all
positions
 Monitor price volatility
for all positions
 Evaluate sector and
issuer concentration
 Continual review of
portfolio holdings
Composite Performance*
Strategy Highlights
Returns as of March 31, 2017
 Dynamic and diversified exposure to high
quality, attractively valued corporate bonds
2
0
3 Months
5.3
4.9
5.0
5.5
5.4
5.1
4.9
5.1
4.4
4.1
3.9
4.3
 Enhanced total return opportunity through
an active approach to credit, sector and
security selection
 A deep, experienced investment team,
backed by one of North America’s largest
global credit research groups
1.9
1.9
1.8
1.8
%
4
4.3
4.0
4.1
4.1
6
4.3
4.0
4.8
4.3
8
1 Year
3 Years
5 Years
7 Years
10 Years
Canadian Investment Grade Corporate Fixed Income Composite — Gross
Canadian Investment Grade Corporate Fixed Income Composite — Net
Benchmark**
FTSE TMX Canada Corporate Bond Index
Investment Team
Calendar Year Returns (%)
Years of
Experience
2016
2015
2014
2013
2012
2011
Terry Carr, CFA
31
Canadian Investment Grade Corporate Fixed Income
Composite — Gross3
3.90
2.59
7.89
1.03
6.96
8.09
Jean-Pierre D’Agnillo, CFA
27
Canadian Investment Grade Corporate Fixed Income
Composite — Net3
3.59
2.28
7.57
0.73
6.64
7.77
Altaf Nanji, CFA
19
Benchmark**
3.73
2.85
8.79
-1.19
3.60
9.67
Roshan Thiru, CFA
17
José Manuel Saracut, CFA
19
Saad Qazi
4
*Past performance is not indicative of future results. Performance shown is the Manulife Asset Management Limited Canadian
Investment Grade Corporate Fixed Income composite as of March 31, 2017 in CAD. Returns greater than one year are
annualized. ** Benchmark based on FTSE TMX Canada Universe Bond Index prior to July 2015, and FTSE TMX Canada
Corporate Bond Index thereafter. Composite Inception date, April 1, 2000.
For Institutional/Investment
Professional Use
Only.
For Institutional/Investment
Professional
Use Only.
Not for Distribution
to Distribution
the Public. to the Public.
Not for
Canadian Investment Grade Corporate Fixed Income Strategy
March 31, 2017
Portfolio Characteristics4
Sector Allocation (%)4
Canadian
Investment
Grade
Corporate Fixed
Income
FTSE TMX
Canada
Corporate
Bond Index
6.18
6.22
A
A
Average Yield to Maturity (%)
2.57
2.52
Industrial
Number of Holdings
224
930
Real Estate
Modified Duration (years)
Average Credit
Financial
Communication
Infrastructure
Maturity Distribution (%)
4.1
Securitization
<1 year
1.0
2.2
1.0
0.0
0.9
0.0
11.2
10.0
9.4
15.8
8.1
6.4
18.5
6.2
4.52
0.08
1–4.99 years
47.42
55.02
5–10 years
23.63
19.00
> 10 year
24.44
25.90
Canadian
Investment
Grade
Corporate Fixed
Income
FTSE TMX
Canada
Corporate
Bond Index
2.96
3.45
Caisse Centrale Desjardins
1.75
2-Mar-2020
1.32
AA
12.56
25.22
Toronto-Dominion Bank
2.56
24-Jun-2020
1.21
A
39.99
34.15
Choice Properties
3.60
20-Sep-2022
1.20
BBB
44.04
37.18
Laurentian Bank of Canada
2.50
23-Jan-2020
1.16
0.45
0.00
Manulife Financial
7.41
31-Dec-2019
1.14
Bank of Montreal
2.84
4-Jun-2020
1.13
Wells Fargo Canada
3.46
24-Jan-2023
1.09
Government of Canada
Cash & Equivalents
0
10
20
30
40
Canadian Investment Grade Corporate Fixed Income
FTSE TMX Canada Corporate Bond Index
Characteristics Data Source: POINT©
Credit Quality (%)4
AAA
BB
Includes Cash and Cash Equivalents
Portfolio Risk Parameters4
50
60
Top Ten Holdings (%)4
Issuer
Coupon Maturity Date
Portfolio
Credit Quality by Security
AAA–BBB
George Weston
4.12
17-Jun-2024
1.07
Modified Duration
+/- 2 years
Central 1 Credit Union
2.89
25-Apr-2024
1.06
2.75
22-Apr-2021
Non-Corporate Bonds*
Maximum 20%
Laurentian Bank of Canada
Foreign Debt
Maximum 10%
Total1
Corporate Issuer Exposure
Maximum 10%
*Publicaly traded Government of Canada and municipal bonds
Manulife Asset Management™ is the institutional asset management arm of Manulife Financial
Corporation. Manulife Asset Management™ and its affiliates provide comprehensive asset
management solutions for institutional investors and investment funds in key markets around the
world.
Rounding discrepancies possible.
The Canadian Investment Grade Corporate Fixed Income strategy provides a bond portfolio offering
superior income compared to traditional bond funds. The Fund invests primarily in Canadian corporate
bonds. The portfolio of the Fund has an average credit rating of at least BBB at all times.
**Benchmark based on FTSE TMX Canada Universe Bond Index prior to July 2015, and FTSE TMX
Canada Corporate Bond Index thereafter. The FTSE TMX Canada Corporate Bond index is comprised
primarily of semi-annual pay fixed rate corporate bonds issued domestically in Canada and
denominated in Canadian dollars, with an investment grade rating. It is not possible to invest directly in
an index.
The indices cited are widely accepted benchmarks for investment performance within their relevant
regions, sectors or asset classes, and represent non-managed investment portfolios. Although these
indices are similar to the fund's objectives, there may be material differences including permitted
holdings or investment strategies, which may impact returns.
This information has been provided by Manulife Asset Management. All material is compiled from
sources believed to be reliable and correct but accuracy cannot be guaranteed. This is not to be
construed as an offer to buy or sell any financial instrument nor does it constitute an offer or invitation
to invest in any fund managed by Manulife Asset Management and has not been prepared in
connection with any such offer. This information does not constitute, and should not be construed as,
investment advice or recommendations with respect to the securities and sectors listed.
References to securities, transactions or holdings should not be considered a recommendation to
purchase or sell a particular security and there is no assurance that, as of the date of publication, the
securities remain in the portfolio. Additionally, it is noted that the securities or transactions referenced
do not represent all of the securities purchased, sold or recommended during the period referenced
and there is no guarantee as to the future profitability of the securities identified and discussed herein.
For prospective clients in the US: This piece is for professional investor use only.
For prospective clients in Canada: This piece is for institutional investors and adviser use only.
For prospective investors in the United Kingdom: This document is directed only at persons satisfying
the FCA’s client categorisation criteria for an eligible counterparty or a professional client and should
not be relied upon by any other person. Therefore, this document is a ‘non-retail communication”
within the meaning of the UK FCA Rules and is not intended and should not be communicated to or
relied upon by a person who would be classified as a retail client.
For prospective clients in Hong Kong: This piece is distributed by Manulife Asset Management (HK)
Limited for Professional Investors use only and as such, is not approved under the Securities and
Futures Ordinance (SFO) or the Companies Ordinance and shall not be distributed to nonProfessional Investors in Hong Kong.
For the information of investors from other jurisdictions: Availability of the services described herein
305005
14.2
Energy
50.2
40.9
1.06
11.44
1 Strategy
also held future contracts for interest rate management purposes. As of March 31,
2017, the Strategy had short positions in 10-Year Government of Canada Bond Futures. Total
futures exposure were -1.53% on a dollar duration weighted basis.
may be limited by applicable law in certain jurisdictions and none of this document and any related
materials may be distributed or published in any jurisdiction, except under circumstances that will
result in compliance with applicable laws and regulations. Further limitations on the availability of the
advisory services described herein may be imposed.
1 The material contains information regarding the investment approach described herein and is not a
complete description of the investment objectives, risks, policies, guidelines or portfolio management
and research that supports this investment approach. Any decision to engage Manulife Asset
Management should be based upon a review of the terms of the prospectus, offering documents or
investment management agreement, as applicable, and the specific investment objectives, policies
and guidelines that apply under the terms of such agreement. There is no guarantee investment
objectives will be met. The investment process may change over time. The characteristics set forth
above are intended as a general illustration of some of the criteria the strategy team considers in
selecting securities for client portfolios. Client portfolios are managed according to mutually agreed
upon investment guidelines.
2 No investment strategy or risk management techniques can guarantee returns or eliminate risk in any
market environment.
3 Gross performance results do not reflect the deduction of investment management fees, and are net
of commissions and foreign withholding tax. Net performance results reflect the application of the
highest incremental rate of the standard investment management fee schedule to gross performance
results. Actual fees may vary depending on, among other things, the applicable fee schedule and
portfolio size. Investment management fees are available upon request.
4 Portfolio characteristics — Holdings, sector weightings, market capitalization and portfolio
characteristics are subject to change at any time and are based on a representative portfolio.
Holdings, sector weightings, market capitalization and portfolio characteristics of individual client
portfolios in the program may differ, sometimes significantly, from those shown. This information does
not constitute, and should not be construed as, investment advice or recommendations with respect to
the securities and sectors listed.
Manulife Asset Management Limited, Manulife Asset Management (US), Manulife Asset Management
(Europe) Limited, and Manulife Asset Management (Hong Kong) Limited claim compliance with the
Global Investment Performance Standards (GIPS®). To receive a complete list and description of
Manulife Asset Management’s composites and/or a presentation that adheres to the GIPS standards,
contact Institutional Sales at 1-888-332-7132, or visit us at www.manulifeam.com.
Manulife Asset Management, Manulife and the block design are trademarks of The Manufacturers Life
Insurance Company and are used by it and its affiliates including Manulife Financial Corporation.
Manulife Asset Management (US) LLC (“MAM US”) and Manulife Asset Management (North America)
Limited (“MAM NA”) are indirect wholly owned subsidiaries of Manulife. They may provide advisory
services, and may market such services, under the brand name “John Hancock Asset Management”,
and MAM US may also use “Sovereign Asset Management.” These brand names may, as applicable,
be described as “a division of” MAM US or MAM NA, but are not separate legal entities.
FS.322857
For Institutional/Investment Professional Use Only.
Not for Distribution to the Public.