By Frank Mullen, portfolio manager
Ben Graham, a famous investor, once described the process of fixed income investing as a “negative art. It is a process of exclusion and rejection, rather than of search and acceptance.”
This is an apt description of our investment process. The return from your bond investment is capped at the interest you receive and the return of your principal. Your EdgePoint Investment team spends their days not only uncovering undervalued investment opportunities, but also making an active choice to avoid investing in many businesses and areas of the market to which others may feel comfortable lending money.
It’s been one year since the world and the financial markets were disrupted by COVID-19. I think it’s a good time to review how our investment approach remains consistent during a period of high volatility and how we seek to capitalize on those periods in our own way.
People often ask us for examples of interesting ideas that we’re finding, but rarely are we asked about areas of the market that we’re avoiding. Over time, the areas that we avoid seemingly add as much value as those that we choose to invest in, highlighting how apt the “negative art” description truly is.
Read the rest here >> 2021 – EdgePoint 1st Quarter Commentary – Fixed Income