Celebrating two decades of euro credit: your questions, our answers

In this Q&A, the strategy's managers – Felix Freund and Josef Helmes – share insights about their philosophy, lessons learned, and why investment-grade credit remains compelling in today’s uncertain environment.

1. Looking back over 20 years, what was the original aim of the strategy, and have you achieved it?

We set out to deliver stable, consistent outperformance – and we’re glad to say, we’ve done just that.

The strategy is designed to perform through the cycle, offering dependable returns whether markets rise or fall. Since inception, it has beaten its benchmark in most rolling 12-month periods.

Our core focus is European investment-grade (IG) bonds, one of the largest and most liquid credit markets globally. Importantly, we also have the flexibility to tap high yield and government securities when opportunities arise. That blend has helped us deliver on our goal.

2. How has your investment philosophy evolved over this time?

Honestly? It hasn’t – and that’s intentional.

From day one, we’ve focused on fundamentals. Company strength drives credit spreads, and that belief still holds. What’s changed is how markets react – often inefficiently, in our view, especially when companies undergo meaningful change. That’s where we find the best opportunities.

Our process is rooted in deep, bottom-up research and agile risk management. We want to fully understand the businesses and structures in which we invest.

So the philosophy stays the same, but the way we apply it evolves with the market.

3. What drives the strategy's success?

Process matters but people matter more.

Our approach is robust and tested across cycles. But the real strength lies in the team: experienced (our portfolio managers have an average of 24 years in the industry), collaborative, and supported by a global research platform covering 80% of the euro IG universe.

Scale helps too. With over 50 credit specialists worldwide, we share insights across regions. That flow of information is key to spotting opportunities and avoiding blind spots. Add cross-asset collaboration with equities and real estate, and you get richer perspectives and better decisions.

4. How has continuity shaped management?

It’s made a huge difference.

We’ve worked together for more than 12 years. That trust and shared understanding help us act decisively, which is vital in credit markets. Strong portfolio manager relationships are key to delivering consistent, stable performance over time.

5. How do you integrate sustainability?

Environmental, social and governance (ESG) considerations have been a guiding light for decades. We have embedded them into research, portfolio construction and engagement. Proprietary ESG ratings guide decisions, and, through engagement, we push companies for better standards.

Regulation accelerated change, but we were ready. Transitioning to SFDR Article 8 in 2022 was smooth and performance didn’t suffer. Doing the right thing doesn’t mean compromising returns. In fact, our sustainable and traditional euro credit strategies have delivered similar returns over time.

6. Biggest lessons from market cycles?

Stay humble. Every shock is different. Models and experience help, but they won’t predict the next turn. Keep evolving your thinking, understand what drives markets now, and view every cycle through two lenses: risk and opportunity.

7. When has the strategy's approach proved its worth?

Several times – each with its own story.

During the global financial crisis, we avoided weak banks like Lehman Brothers, then seized the recovery in 2009 by buying bank bonds at attractive levels. In the eurozone turmoil, we outperformed in 2011 and had one of our best years in 2012 as credit opportunities paid off.

The Covid pandemic hit hard early in 2020, but we held firm, avoided fallen angels, and captured upside as spreads normalised. In 2022, a shorter rate position and zero Russian exposure helped us outperform.

The lesson? Strong credit selection, disciplined risk management and agility make the difference.

8. Outlook for European credit?

It’s a mixed picture – but not without opportunity.

Geopolitical risks remain front of mind. The Russia-Ukraine conflict and instability in the Middle East continue to cast a long shadow. Political uncertainty in Europe – most recently in France – has widened government bond spreads. Add fiscal concerns and rising deficits, and it’s no surprise we’ve seen steeper yield curves and pressure on long-end valuations.

That said, credit markets have held up well. Inflows remain strong and supply was light over the summer. Corporate fundamentals look solid: leverage is stable, margins are healthy, and interest coverage is robust. Financials, in particular, have shown resilience, with banks and insurers benefiting from improved profitability and a steeper yield curve.

The picture on valuations is mixed. Credit spreads are tight and seem to price in an optimistic macroeconomic outlook. Yet all-in yields remain attractive thanks to the steep curve and higher government bond supply keeping yields elevated.

On rates, consensus points to the European Central Bank holding at 2% during 2026. We agree. The US Federal Reserve, by contrast, should keep cutting, pulling US Treasury yields lower across medium and long maturities. That should exert some downward pressure on European government bond yields.

So, we’re constructive but cautious. Yields look attractive, but we’re keeping a close eye on the risks.

9. How is the strategy positioned for a low-growth environment?

IG credit shines when growth is subdued. History backs that up. IG performs best when growth hovers around 1-2%, offering stability and reliable income when riskier assets struggle.

Steep curves boost carry and roll-down, while elevated government yields make IG attractive. We’re overweight financials, which benefit from strong earnings momentum, and underweight cyclicals like materials and consumer discretionary, where profit warnings are becoming more common. We’ve also reduced exposure to French issuers, given recent widening politically driven spreads.

The goal: resilient income and some capital gains if medium and longer-dated bond yields fall.

For more information about the strategy including performance please visit our fund centre by clicking here