The Manager

CCI’s edge is in generating “alpha” by exploiting mispricings in liquid, high-grade credit and sovereign securities in contrast to traditional fixed-income managers that drive returns through adding more interest rate duration, credit default, and/or illiquidity risk (known as “beta”). This alpha generation is itself a function of the world-class analytical insights rendered by CCI’s human capital.

CCI’s macro forecasting prowess is well documented and has included, amongst other things, accurately predicting well ahead of other analysts: the housing boom between 2013 and 2017; the record housing correction between 2017 and 2019; the otherwise unexpected upgrade of Australia’s sovereign credit rating to AAA “stable” in 2018; the sharp housing recovery in May 2019; the early return of the Australian federal budget to surplus in 2019; the shock outcome of the 2019 Federal election; the retention of franking credits on hybrid securities; the upgrade of the four major banks’ senior bonds to AA- “stable” in 2019; the upgrade of Australia’s economic risk score in 2019; the upgrade of the major banks’ stand-alone credit profiles from “a-” to “a” in 2019; the unanticipated upgrade of the major banks’ hybrids from a high yield BB+ rating to an investment-grade BBB- rating in 2019; the upgrade of the major banks’ subordinated Tier 2 bonds from BBB to BBB+ in 2019; the early April 2020 peak in the first COVID-19 infection waves in Australia, Europe and the US; the peak in the second COVID-19 wave in Victoria in late July 2020; and the much smaller than expected 0% to 5% correction in Australian house prices between March and September 2020 followed by the rebound thereafter. 

CCI defines active strategies as those that seek to identify assets that are cheap relative to rigorous quantitative assessments of fair value and which have a high likelihood of converging back to fair value and thus furnishing superior risk-adjusted returns.

CCI has built significant comparative advantages in extremely active asset-selection, top-down and bottom-up quantitative bond pricing methods, unique quantitative research that renders alpha-generating insights (including the use of artificial intelligence), intensive financial and commercial due diligence, and the minimisation of both credit and interest rate duration risks. 

CCI believes that there is a significant role for liquid, low duration active credit alpha exposures to play in both individual and institutional portfolios, especially in a world where interest rates are very low and duration risks are unusually elevated.