A differentiated approach
We favour low risk-value add strategies using security selection seeking to deliver consistent, enhanced returns.
True to label enhanced fixed income investing
We match the duration, credit quality, and yield curve of the index with no structural biases or credit enhancement.
Large, experienced, and stable team
We have a deep and experienced global fixed income team with more than 130 investment professionals located in Australia and New Zealand, the United States, and Europe.
Our investment philosophy has been built over the years based on our extensive in-house research, and is based on fundamental research, capital preservation, and a strong respect for liquidity. When managing fixed income portfolios, we employ diverse sources of alpha and use investment strategies that are adaptable to suit the prevailing market environment. We believe this flexible approach results in a more consistent performance outlook through the cycle.
Differentiated approach
- Over the years, we have performed extensive research into index enhancing which highlights the importance of genuine low-risk enhancing strategies to achieve consistent outperformance.
True-to-label enhanced fixed income
- Our investment approach replicates the key characteristics of the benchmark before utilising sector rotation and security selection strategies to generate alpha, resulting in portfolios that remain aligned to the benchmark and are not structurally overweight certain components such as credit.
Proven performance
- Through our differentiated investment approach, the strategy has delivered a 25 year track record of consistent outperformance through market cycles.1
Access to investment expertise
- The strategy is managed by one of Australia's largest fixed income managers, providing access to the expertise of more than 130 investment professionals across our global locations.
1As at 31 March 2024, before fees. Past performance is not a reliable indicator of future performance. Strategy performance is available upon request.
In managing enhanced Australian fixed income, we believe it is important to deliver excess returns without materially differing from the risk profile of the index. In practice, this means focusing on security selection and capitalising on relative mispricings, while matching the credit profile and duration of the index.
The strategy partially replicates the index before seeking to add alpha by combining low-risk security selection in government and credit with sector rotation.
Sector rotation:
Strategic level of credit exposure and allocation to government, semi-government and corporate sectors for the portfolio set based on where we are in the investment cycle.
Security selection:
Fundamental analysis of credit issuers and proprietary relative value models provide the framework for selecting which securities are attractive for the strategy.
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 returns than traditional cash investments. The risk of an investment in the Strategy may be higher than an investment in a typical bank account or term deposit. Distributions may fluctuate, as may the Strategy’s value. The value may vary by material amounts, even over short periods of time.
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. These risks may be greater for securities offering higher returns. Income security risk may cause volatility and/or financial loss to a Strategy.
Interest rate risk: The value of the investments that the Strategy has exposure to will generally be sensitive to changes in market interest rates. In addition, changes to reference rates may impact the value of your investment in a Strategy. The Strategy may take active interest rate positions, either through physical security selection or through derivatives. Movements in market interest rates may impact the value of your investment in the Strategy.
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