At the heart of Colchester's value-oriented philosophy is the belief that investments should be valued in terms of the income they will generate in real terms. Our approach is based on the analysis of inflation, real interest rates and real exchange rates supplemented by an assessment of sovereign financial balances. Portfolios are constructed to benefit from those opportunities with the greatest relative investment potential for a given level of risk.
Colchester's portfolios principally comprise sovereign bonds. The firm eschews corporate credit, believing instead that its broader sovereign opportunity set provides sufficient diversity and return potential to add value without resorting to lower credits. In addition, currency risk is managed in a primarily defensive fashion, attempting to take full advantage of long-term currency valuation extremes.