In what way does the bottom-up approach to credit strategy assess investments?

The bottom-up approach to credit strategy is centered on assessing the relative value of specific issuers or bonds rather than taking into account broader economic trends or market conditions. By concentrating on the fundamentals of individual entities, this approach seeks to identify credit quality and the potential for repayment based on the financial health, operational performance, and other unique characteristics of the issuer. A bottom-up analysis often involves detailed research into the issuer's financial statements, business strategies, and competitive positioning, leading to a deeper understanding of specific investment opportunities.

This method contrasts with approaches that focus on macroeconomic factors or overall market conditions. While those may inform an investor's general outlook, the bottom-up strategy hones in on the unique attributes and risks intrinsic to each issuer or bond, facilitating more granular investment decisions that can potentially yield better risk-adjusted returns.