Flexible investment approach
Combining sector rotation and security selection to capture opportunities in high-quality credit securities.
Clear investment philosophy
Focusing on fundamental research, capital preservation, and a strong respect for liquidity as credit risk is asymmetric and liquidity risk is often overlooked in income investing.
Large, experienced and stable team
We have a deep and experienced global fixed income team with more than 130 investment professionals located in Australia, New Zealand, the United States and Europe.
Our investment philosophy is based on fundamental research, capital preservation and a strong respect for liquidity. This philosophy has been built over the years through our extensive in-house research showing that credit risk is asymmetric and liquidity risk is the biggest risk in managing credit. As such, liquidity is paramount, and our priority is to avoid the negatives and limit drawdowns rather than chase yield.
The potential for capital preservation and liquidity
- Our underlying philosophy focusses on avoiding the downside, with a strong respect for liquidity.
Low duration
- In a volatile yield environment, the strategy's low embedded interest rate duration can provide an attractive alternative to traditional bond exposure.
Proven performance
- The strategy has provided strong performance since its inception in 2000, particularly during periods of market stress.
Access to investment expertise
- The strategy is managed by an experienced and stable credit team with the support of our global fixed income resources.
The Macquarie Australian Diversified Income strategy provides exposure to a range of highly rated credit-based instruments (primarily Australian issued bank, corporate and asset-backed securities) and cash. The strategy seeks to outperform traditional cash investments by gaining exposure to carefully selected corporate and structured securities which we believe offer the best relative value and outlook. We seek to enhance investment returns further by formulating views on the likely direction of short-term interest rates and positioning the portfolio to benefit from these views. Our propriertary in house models and expertise such as the 'Safety factor model' for Australian Residential Mortgage Backed securities provides us a competitive advantage across market conditions.
Our strategy utilises a top-down sector rotation and bottom-up security selection process which are backed by our in-house research and quantitative analysis.
Sector rotation
- Strategic level of credit exposure for the portfolio set based on where we are in the investment cycle.
Security selection
- In-depth and disciplined research conducted by dedicated credit analysts on investment universe
- Attractive credit sectors and relative value opportunities identified.
For more information about our Credit capabilities
Risks
All investments carry risk. Different investments carry different levels of risk, depending on the investment strategy and the underlying investments. Generally, the higher the potential return of an investment, the greater the risk (including the potential for loss and portfolio value variability over the short term). Some of the significant risks of the Strategy are included below.
Investment risk: The Strategy seeks to generate higher income returns than traditional cash investments. The risk of an investment in the Strategy is higher than an investment in a typical bank account or term deposit. Amounts distributed to unitholders may fluctuate, as may the Strategy’s unit price, by material amounts over short periods.
Income securities risk: The Strategy may have exposure to a range of income securities. The value of these securities may fall, for example due to market volatility, interest rate movements, perceptions of credit quality, supply and demand pressures, a change to the reference rate used to set the value of interest payments, market sentiment, or issuer default.
Credit risk: The value of the investments that the Strategy has exposure to may be sensitive to changes in market perceptions of credit quality, both of individual issuers and of credit markets in general. Deteriorations in the market’s perception of credit quality may negatively impact the values of such securities, and hence the Strategy’s unit price.
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