Australian Fixed Income – active management for higher yield
- An active manager in the Australian Fixed Income space that seeks to add value through the broad range of opportunities that exist in domestic and global bond markets
- Balanced risk approach to fixed income ensures diversification of investment opportunities
- Unconstrained idea-based investing, supported by strong quality controls and measurement
- Collaboration with specialists across the broader Global Fixed Income team through the Investment Opinion Network platform
Our process ensures true diversification of risk from the most defensive part of your portfolio
Australia’s bond market offers a range of attractive characteristics (developed market, low correlation to other markets, liquid currency and futures) making it a prime location for fixed income investment for both domestic and foreign parties. Investing in Australian fixed income can help diversify a portfolio, earn regular income, all while maintaining a higher yield than bank deposits. Our 'balanced risk approach’ to fixed income ensures portfolios are built in a balanced and diversified manner. Because one particular view does not dominate – we increase the likelihood of accomplishing portfolio objectives. We believe long-term, repeatable investment performance is achievable when quality control methods are applied to each element of an investment process. Without measurable standards, investment results lack sufficient transparency making repeatable results unlikely.
Unconstrained by a house view, we separate research from portfolio construction to better manage risks
Moving away from a centralised “house view", we utilise a range of varied and uncorrelated alpha (above benchmark return) sources in our portfolios. Our investment managers implement an independent research, design and portfolio construction process. Decoupling idea generation and the associated research processes from portfolio design and construction allows us to better specify, manage, and improve our research processes. This active approach to fixed income helps improve the overall risk and return profile of the portfolio via both diversification of thought and underlying asset class exposure.
Measurable and managed investment ‘skill’ helps achieve our clients’ objectives
We believe the best way to achieve a client’s objective is to structure the design of the portfolio around clear, realistic skill targets, and measure the progression of skill achieved over time. We aim to objectively measure, manage, and improve our skill over time, determining what was possible and comparing this against what was accomplished. Through alpha/beta separation, we can attach our alpha sources to a variety of benchmarks, this allows us to build tailored products in partnership with our clients to ensure we’re best placed to meet their investment objectives.
We have the advantage of a transparent & unique platform housing our investment decisions
Our Investment Opinion Network (ION) has been designed to ensure full transparency of our investment decisions to allow us to have meaningful discussions with investors around portfolio positioning, performance and outlook. While we certainly do not expect to always get it right (and our designs account for this), we do feel it is our obligation to dissect and understand our investment decisions and behaviour in order to communicate effectively to clients and become better investors tomorrow than we are today.
Our corporate RI strategy is based upon three strategic pillars of quality, stewardship and engagement.
In the Australian fixed income space, the Environmental, Social and Governance (ESG) assessment most often comes through its impact on the internal rating provided by the Credit Analysts via our Credit Research process. The portfolio management team then use this to assess relative value when compared to other similarly rated issuers. For example, ESG considerations in the automotive industry have led to our internal rating for some issuers being lower than that of the external rating agencies. As a result, the risk-reward assessment has often been decided such that we are underweight that sector in our active Australian fixed income portfolios.
Performance and Documents
Source: First Sentier Investors 2020
Performance returns are calculated gross of management fees and net of transaction costs. Performance returns for periods greater than one year are annualised. Past performance is not a reliable indicator of future performance.
Led by Stephen Cooper, we consist of seven specialists based in Sydney with an average of 20 years of industry experience.
We draw on the wealth of knowledge and resources from specialists across our fixed income capabilities. Over 50 experienced professionals are employed in major markets including New York, London, Hong Kong and Sydney.