Pushing the active gear for the win
Australian Fixed Income (Inc. Diversified)
Winner
Henderson Australian Fixed Interest Fund
Finalists
BT Fixed Interest Wholesale Trust
PIMCO Australian Bond Fund – Wholesale Class
It's all about active management when it comes to the fixed income landscape, according to the winner of the Australian Fixed Income (Including Diversified), Henderson Australian Fixed Interest Fund.
Henderson Global Investors head of Australian fixed interest, Glenn Feben, said the fund had a value driven approach with a medium-term assessment of underlying fundamentals.
"We are also a manager that tends to accept that it's difficult to outperform all the time and active management will inevitably involve periods of underperformance, during those periods we're not inclined to change positions just because things may not be working in the short-term," Feben said.
"The fund has been able to perform well during that time is that in terms of its interest rate positioning as it maintained a strategic defensive position and that meant the fund was well placed to outperform in the second quarter of the year when fixed income performance started to fall away quite sharply as interest rates went up."
Feben said the challenge of active managers to develop strategies that would add value over the medium to longer-term had not changed over the years.
However, thanks to the recent change in the interest rate environment fixed income investors needed to modify and adjust their approach to active interest rate management.
"We've become more nimble in our interest rate strategy. We generally maintained quite a defensive attitude last year, and added duration back as yields moved towards the higher end of what has been a fairly well established over the past few years," Feben said.
Finalist and last year's winner, BT Fixed Interest Wholesale Trust, has relied on transparent, consistent, and repeatable investment process for its success.
BT Investment Management head of income and fixed interest, Vimal Gor, said the fund "had a long volatility bias and it's also very liquid which means we don't rely on credit to add a lot of our return and so we're effectively focusing on alpha generation".
"In the last year we've tilted more of our risk towards an FX position and away from duration trade and have focused on yield curve position."
Anticipating the direction and impact of central bank policy has been crucial to finalist PIMCO Australian Bond Fund - Wholesale Class.
The fund's portfolio manager, Robert Mead, said: "PIMCO's long-term, or secular, outlook for the global macro-economy was an essential part of our portfolio positioning".
"The reality of negative rates in Europe and Japan will continue to impact the pricing of all bonds globally, including Australian bonds which we believe will ensure that the lower for longer interest rate mantra will remain a key driver of bond performance over the coming year," Mead said.
AUTHOR
Malavika Santhebennur
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