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Our Approach

Investment Approach

Overview

Durham Asset Management’s investment approach is grounded in disciplined fixed‑income investing with a focus on risk‑adjusted outcomes, capital preservation, and consistency across market cycles. The firm applies a structured framework to capital deployment that balances fundamental credit analysis with active portfolio construction, while operating within clearly defined mandates and risk parameters.

The investment approach is applied consistently across strategies, with adjustments reflecting the objectives, liquidity profile, and constraints of each mandate.

Capital Deployment Framework

Bottom‑Up and Top‑Down Balance

Investment decisions incorporate both bottom‑up and top‑down analysis. Bottom‑up research drives individual security selection, while top‑down considerations inform sector allocation, relative value positioning, and portfolio risk alignment.

Sector selection reflects broader economic, interest‑rate, and credit‑cycle considerations, while security selection focuses on issuer‑specific fundamentals and structural characteristics. This balance is intended to ensure that portfolios are constructed with awareness of both macro conditions and issuer‑level risk.

Credit Selection Philosophy

Credit selection emphasizes issuers with resilient business models and strong capacity to service debt through market cycles. Preference is given to issuers with:

  • Large and diversified revenue bases or meaningful collateral support
  • Stable and predictable EBITDA generation
  • Business models serving essential services or broad consumer bases
  • Management teams with a demonstrated commitment to maintaining investment‑grade credit profiles where applicable

Credit exposure is evaluated on a risk‑adjusted basis, with attention to downside scenarios rather than return maximization through incremental credit risk.

Role of Duration

Duration risk is managed deliberately and conservatively. Portfolios are generally structured to maintain duration exposure broadly in line with applicable benchmarks, while allowing for tactical adjustments where relative value or market conditions warrant.

Duration positioning is used as a risk management and portfolio construction tool rather than as a primary source of return, with an emphasis on limiting unintended interest‑rate sensitivity.

Role of Liquidity

Liquidity is a core consideration in portfolio construction. The majority of each portfolio is maintained in liquid instruments appropriate to the mandate, enabling flexibility in portfolio management and risk control.

Liquidity management is aligned with the expected redemption profile, regulatory requirements, and investment horizon of each strategy, with adherence to mandate‑specific liquidity parameters.

Role of Structure (Secured vs. Unsecured)

Capital structure considerations are integral to credit assessment. Investment decisions evaluate the position of each security within the issuer’s capital structure, with explicit consideration of:

  • Secured versus unsecured exposure
  • Collateral quality and enforceability
  • Recovery prospects under adverse scenarios

Where appropriate, preference is given to structures that offer additional downside protection, consistent with the objective of capital preservation.

Portfolio Construction and Risk Control

Portfolio construction reflects a combination of diversification, mandate discipline, and ongoing risk assessment. Risk is evaluated at both the individual security level and the aggregate portfolio level, with attention to concentration, correlation, and liquidity.

The investment process incorporates continuous monitoring of issuer fundamentals, market conditions, and portfolio exposures, with adjustments made as required to maintain alignment with stated objectives and risk parameters.

Application Across Strategies

The investment approach described above is applied consistently across Durham Asset Management’s strategies, with implementation tailored to the specific objectives and constraints of each mandate. Differences across strategies reflect variations in asset class, liquidity profile, and income objectives rather than changes in underlying investment discipline.

This consistency is intended to support repeatability, transparency, and disciplined execution across market environments.