Actively managing credit investments for more than 20 years.
Focused on earning strong risk-adjusted returns through bottom-up, fundamental research.
A Bottom-Up Approach
At Burgundy, we apply the same disciplined perspective to credit investing as we do to equity investing. Our independent, bottom-up approach focuses on individual companies, allowing us to identify opportunities with the most attractive risk-reward potential.
We concentrate on securities that offer strong returns through coupon payments and potential capital appreciation—but our primary focus is on issuers that can meet their debt obligations and principal repayments at maturity. Only when we are satisfied with the quality and value of the security do we initiate a position, building our portfolios bond by bond.
The Team
Our Toronto-based Investment Team, comprising both equity and credit specialists, works in a collaborative, idea-sharing environment, leveraging their expertise across geographies and asset classes.
Evaluating Companies
Building portfolios bond by bond
Rather than rely on credit agency ratings or try to predict the direction of future interest rates, our independent research focuses on key metrics that define a company’s financial well-being—capital allocation priorities, balance sheet health, and free-cash-flow generation—to identify mispriced credit investments.
We analyze financial statements, speak with management, consult with industry experts, and leverage external research prior to making an investment decision. This approach, combined with a keen eye for value, leads us to investment opportunities with the most attractive risk-reward potential.
- Strong and sustainable—or increasing—barriers to entry and competitive advantages
- Attractive value proposition to customers
- Manageable macro, political, and regulatory risks—and ideally some opportunities
- Capable and honest
- Good capital allocators
- Practical on ESG matters
- Interests aligned with shareholders and focused on long-term value creation
- Level and profile of debt
- Stability of cash flow
- Bondholder protection (covenants)
A Corporate Edge
While we invest across the fixed income spectrum, from government bonds to high-yield investments, our edge lies in corporate credit. This is where our bottom-up, fundamental credit expertise shines brightest, allowing us to deliver strong, risk-adjusted returns.
We particularly favour lower-rated investment-grade credit investments (e.g., BBB-rated) and higher-quality high-yield issuers (e.g., BB-rated) where we believe in-depth research and active management can add value to your investment portfolio over the long run. Companies with these ratings often offer a return premium that far outweighs their risk of default.
Assessing Risk
Preserving Capital
As in our equity investment approach, protecting our clients’ capital is our top priority. We view risk as the permanent loss of capital, not interest-rate-driven volatility. Default risk, which occurs when an issuer fails to meet its debt obligations, is the single largest risk inherent in credit investing.
By rigorously analyzing financial statements, industry dynamics, and security-specific features, we assess a company’s creditworthiness and attempt to identify potential red flags that may signal an increased risk of default. Focusing on companies with strong fundamentals, aligned management, and appropriately capitalized balance sheets helps us reduce the likelihood of defaults and, in turn, protect your capital from permanent impairment.
A Global Perspective
Our global investment perspective extends to credit investing. Going global means a broader opportunity set, enhancing our ability to identify the most attractive risk-reward potential. It also provides important diversification to your portfolio.
Our credit team regularly collaborates with their equity counterparts, sharing insights and enriching their understanding of companies across geographies.
The Role of Credit in Your Portfolio
Whether you are an individual or institutional investor, credit—and the income it generates—can play an important role in a well-diversified portfolio.
Predictable Income
Credit investments deliver consistent income through coupon payments.
Cyclical Spreads
Credit spreads, representing the difference between credit yields and government bond yields, exhibit cyclical and mean-reverting behaviour at the index level. This creates opportunities for active managers like Burgundy.
Volatility & Opportunity
Like equity prices, credit spreads are more volatile and react faster than changes in credit quality. This volatility creates opportunities.
Diversification
Credit investments add valuable diversification to your portfolio, mitigating your overall risk.
Priority
As bondholders, you become creditors of the issuer, gaining certain protections and priority over equity holders.
Views & Insights
Dive into the minds of the people making investment decisions on your behalf.
Additional Investment Resources
Equity Approach
A long-term, quality/value investment approach.
Sustainable Investing
We take an ESG integration approach to investing.
Investment Strategies
An overview of our equity, balanced, and credit offerings.
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