Delivering Consistent Risk Profiles
Since our founding, Zeo has focused on delivering consistent risk profiles so investors can reach their destination with fewer worries. Our standards are high, and few bonds make it into our portfolios. As a result, we are committed to respecting capacity constraints in all of our strategies. Our primary goal is to deliver best-in-class credit portfolios that can serve both traditional and sustainable mandates without requiring either to compromise their primary objectives: performance and progress. We execute by being:
We seek out investment opportunities in less-trafficked corporate debt and conduct deep fundamental credit research to mitigate volatility.
Our investment process recognizes that ESG factors are credit factors, as impactful on a company’s creditworthiness as fundamental factors.
We create credit strategies that help investors diversify risk in their fixed income portfolios without compromising their performance goals.
-Venk Reddy, Founder and Chief Investment Officer
Our Investment Process
Our time-tested investment process is designed to uncover overlooked corporate debt with:
Strong quantitative credit metrics,
Defensive characteristics, and
Demonstrable sustainability practices.
Comprehensive Idea Generation: Internal and external flow
Highly selective: 95% of the high yield universe filtered out
Volatility Mitigation: Proactively exclude vice industries
Minimum Viability: Leverage, cashflow, liquidity, yield, duration
Fundamental Strength: Qualitative analysis
Resiliency Factors: Quantitative analysis
Long-Term Priorities: Sustainability analysis
Undervalued Opportunities: Selective entry points
Risk-Managed: No one risk overwhelms the portfolio
Buy, Hold, Evaluate: Rarely trading but constantly reconfirming
Consistent Conviction: Each company must stand on its own merit
Our Sustainability Integration
At Zeo Capital, not being bad is not good enough. Effective ESG integration into the credit research process is essential for a truly sustainable portfolio. A creditworthy business operates in a long-term sustainable way. Contaminated land, employee safety claims or an unfunded pension liability is viewed through the same lens as we evaluate financial risks, like leverage, cashflows and liquidity. This effort is native to our fundamental investment process and differentiates us from traditional ESG—it is not an overlay, a screen or an after-the-fact green wash.
We evaluate companies on our proprietary Sustainability SpectrumTM, track them in our in-house Green SlateTM software and engage them directly to discuss opportunities for improvement. A creditworthy issuer may be one with sustainable strength relative to peers or one that is making visible progress toward appropriate sustainable practices, and we take our role in that progress seriously. Our dependable approach to credit investing ensures that every holding in our portfolio is proactively selected to meet both our fundamental and sustainability standards.