Taking time to listen to the signs

3 June 2016

Global fixed income 


Franklin Templeton Global Aggregate Bond Fund 


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PIMCO Global Bond Fund – Wholesale Class
Colchester Global Government Bond Fund

For Franklin Templeton, it has been all about listening to market signals to ensure they avoid too many mistakes, while applying a portfolio of active, low-correlated positions to enhance investment returns over a full market cycle. 

It was also vital that no single holding or portfolio dominated the portfolio.  

Senior vice president, John W. Beck, said listening to the Reserve Bank of Australia as it called for a weaker Australian dollar and positioning the Global Aggregate Bond Fund appropriately while buying a decent amount of exposure back when the dollar fell to 70 cents versus the US dollar added value for investors. 

"The other key dimension was to 'do the maths', and work out that the Bundesbank had more Euros to spend on Bunds than the German government was issuing, meaning rates would stay low," Beck said. 

With over 170 investment professionals, the firm used significant bottom-up resources and its quantitative research group to identify and exploit market inefficacies and cautiously allocate to risk. 

Finalist, PIMCO, said they had to look into a crystal ball and anticipate the direction and impact of central bank policy, while the firm's long-term, secular outlook for the global macro-economy was a crucial part of its portfolio positioning. 

Head of global portfolio management, Sachin Gupta, said the firm's expectations of monetary policy in the Eurozone, both conventional and unconventional, was the reason behind its positioning in government bonds in countries like Italy and Spain over the last few quarters. 

He said the firm's philosophy over the past 40 years was to combine its top-down global outlook with bottom-up security analysis and risk management. 

"We think effectively managing global fixed interest strategies requires a team approach: it ensures that the best insights and investment ideas from our regional and sector specialty desks are transferred into the everyday management of portfolios," Gupta said.   

Being a singular focused global sovereign bond manager without adding credit to porftolios saw Colchester rewarded for its Global Government Bond Fund. 

Portfolio manager, Martyn Simpson, said: "If you're buying into this fund, you would just have pure government exposure, which gives you liquidity other managers can't give you".


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