An alternative approach
Our research shows that utilising diversified sources of alpha rather than depending on large duration bets or credit beta allocations provides a higher consistency of excess returns than traditional core strategies.
Adaptable strategy
Our investment strategies are adaptable to match the market environment and seek to capitalise on the best opportunities available.
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.
Dynamic approach
- We employ diverse sources of alpha and use investment strategies that are adaptable to suit the prevailing market environment and capitalise on the best alpha opportunities available.
Clear investment philosophy
- Our investment philosophy shapes our investment processes, focusing on managing the downside with a strong respect for liquidity, which are critical for a fixed income portfolio.
Proven performance
- Through the cycle, our Core Australian Fixed Interest strategy has consistently delivered stronger longer-term performance versus its benchmark and peers1
1 Source: Mercer. Based on 5-year rolling annualised returns (before fees) over 5 annual periods to 30 June 2023. Comparison with the Mercer Australian Fixed Income (Active universe). Benchmark is the Bloomberg AusBond Composite 0+Yr. Past performance is not a reliable indicator of future performance. Strategy performance is available upon request.
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.
The Macquarie Fixed Income team employs a disciplined investment approach, utilising rigorous proprietary processes and the full spectrum of opportunities available in Australian fixed income.
The strategy is underpinned by four distinct alpha sources – sector rotation, duration, security selection, and dynamic alpha. Each is individually managed using its own proprietary processes and models, backed by robust research. Overall portfolio construction draws on these four alpha sources, with flexible investment ranges helping to protect against risks.
Ultimately, this approach seeks to provide investors with diversified sources of return and greater opportunities to maximise long-term performance through the cycle.
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.
Duration:
Utilises robust proprietary processes to focus on factors that affect short- and medium-term moves in interest rates to generate a combination of strategies and positions rather than single large duration positioning.
Security selection:
Fundamental analysis of credit issuers and proprietary relative value models provide the framework for selecting which fixed income securities are attractive for the strategy.
Dynamic alpha:
The dynamic alpha component of our strategy refers to a range of flexible strategies that can be adapted to opportunities in the market. In many cases, market dislocations caused by imbalances from market participants often lead to low-risk opportunities, which we would take advantage of.
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.
[MCOL-19572]