Fixed Income

Natcan offers a complete range of fixed-income asset management services, including several active and passive investment products. Clients benefit from a complementary and eclectic management team, made up of experts from all bond categories. Our professionals use highly structured management schemes and processes that are focused on mathematical and modeling methodologies. They are capable of building portfolios with very clear risk/reward characteristics, and ensure precise adequacy between the potential return and risk of each position in the portfolio.

Canadian Bonds

Management Approach

We are active managers who apply a quantitative approach based on macroeconomic analyses with emphasis on the management of a reward/risk equation. Our objective is to maintain an asymmetrical relationship between expected returns and underwritten risks, as we believe that an investor’s level of tolerance to risk must guide the targeted level of relative performance. Our management philosophy therefore consists in achieving recurring value added by first identifying investment opportunities from fundamental valuation metrics, and then employing a risk-sensitive quantitative approach to implement strategies.

Management Process

Our management approach is a three-step process:

The first step consists in a strategic replication of the benchmark. The DEX Universe Bond Index contains over 900 securities, some of which are not very liquid. Every bond portfolio will hold only a fraction of these securities. Any replication is therefore partial, making security selection the core of the process. We precisely measure the portfolio’s reaction relative to the benchmark. Several levels of refinement exist for such a measure (duration, sector allocation, maturity, etc.).

The second step involves yield enhancement, which we achieve by replacing certain highly liquid issues with slightly less liquid names in order to obtain a greater yield without undertaking additional credit or duration risk.

The third and final step of the process consists in introducing active deviations from the benchmark so as to generate value added. This step can be carried out via trades in money markets or exchange-listed derivative instruments (futures, options, swaps, and others). The use of derivatives has two key benefits: a larger opportunity set, and minimized trading of the core portion of the fund.

Management Team

Our team of fixed-income professionals comprises 11 experts.

Marc-André Gaudreau and Gilles Chouinard co-head the Fixed-Income team. They work very closely with Mathieu Lachance in the development and implementation of overall portfolio strategies. Richard Lévesque is the manager in charge of money market portfolios while Roger Rouleau is responsible for the management of corporate-bonds. He is supported by a trader: Julien Bastien. Our high-yield bond specialist is Francis Pelletier, and he is backed by an analyst, Simon Dupuis.

The team benefits from the support of a portfolio manager, Nicolas Normandeau, an analyst/trader, Daniel Doedel, and a quantitative analyst, Hugo Sarkisian.

Our team’s complementary skills set it apart from its competitors as they allow for extensive coverage of the field across all bond categories. The team’s expertise is also reflected in its members’ solid educational background: seven CFA charterholders, and five master's degree holders.

Products

Strategy	Description	Availability
Natcan Canadian Bond Fund	The objective of the Canadian government, municipal and corporate bond portfolio is to achieve a rate of return that exceeds the return of the DEX Universe Bond Index.	Pooled Fund Segregated Fund
Natcan Long-Term Canadian Bond Fund	The objective of the Canadian government, municipal and corporate bond portfolio is to achieve a rate of return that exceeds the return of the DEX Long Term Bond Index.	Segregated Fund

For up-to-date information regarding performance and strategies, please visit the Natcan Quarterly Bulletins section.

Corporate Bonds

Management Approach

Our approach focuses on rigorous risk management, thus making capital preservation a key factor. Our experts share a global perspective of financial markets, and favour a disciplined investment process as they believe industry and security selection will greatly contribute to overall performance.

The corporate bond portfolio is managed actively, without duration deviations.

Management Process

The benchmark contains a great number of securities, some of which are not very liquid. Every bond portfolio will hold only a fraction of these securities. Any replication is therefore partial, making security selection a crucial element.

Our management process begins by duplicating the benchmark through rigorous security selection. We then proceed to perform an in-depth analysis of relative values with the help of derivatives so as to increase the yield of the portfolio while avoiding additional credit risk.

Subsequently, we analyze economic, fundamental, and technical factors to try to predict Canada and U.S. credit spreads over a 6-month horizon.

Finally, we initiate different tactical deviations, and conclude with the management, in real time, of these deviations by evaluating the risk and expected return of the portfolio.

Management Team

Natcan benefits from the expertise of professionals dedicated to the management of corporate bonds. Roger Rouleau is in charge of corporate-bonds management. He is assisted by a trader Julien Bastien. Both benefit from the expertise of numerous other resources within the fixed-income team, namely Marc-André Gaudreau and Gilles Chouinard who co-head the team, and Mathieu Lachance, responsible for the government bond strategy. Francis Pelletier, high-yield bond specialist, also supports the team, backed by an analyst, Simon Dupuis.

The team benefits from the support of portfolio manager, Nicolas Normandeau, along with analyst/trader, Daniel Doedel, and quantitative analyst, Hugo Sarkisian.

Our corporate bond team also collaborates with the different equity management teams, sharing information regularly.

Products

Strategy	Description	Availability
Natcan Corporate Universe Bond Fund	The objective of the Canadian corporate bond portfolio is to achieve a rate of return that exceeds the return of the DEX Universe All-Corporate Bond Index	Pooled Fund Segregated Fund

Please note we also offer a mid-term corporate bond strategy and an absolute return credit fund. We invite you to visit the section entirely dedicated to Alternative Investments to learn more.

For up-to-date information regarding performance and strategies, please visit the Natcan Quarterly Bulletins section.

Other Fixed-Income Strategies

Natcan also manages index mandates, global bonds, Canadian short-term and mid-term bonds, and money market securities. Please contact us for additional information.