Passive fixed interest managers shine
Vanguard Investmentshas been given the top rating across three fixed interest categories inNavigator Research’sfixed interest review of 17 managers and over 40 funds in the sector.
The review, which covered Australian fixed interest, international fixed interest, diversified fixed interest and mortgage funds, resulted in all managers being graded investment grade or better with a number of mainly passive managers taking out the top five-star rating.
“Fixed interest is an asset class in which the majority of actively managed funds generally struggle to outperform the index after the deduction of fees and trading expenses,” Navigator research manager Stuart Fechner says.
In light of this Vanguard was the only manager to get five stars in the Australian fixed interest category. A similar result occurred in the International fixed interest category, in which the three funds to receive a top rating were index performance replicating funds - the Vanguard International Fixed Interest Fund (Hedged), the Vanguard International Credit Securities Fund (Hedged) and the Macquarie True Index Global Bond Fund.
The latest review saw hybrid and high yield funds reviewed and rated for the first time.
Three managers in this category were rated four stars (Challenger,Schroder Investment ManagementandUBS Global Asset Management) while two managers given three star ratings (PM CaptialandPortfolio Partners).
The remaining funds rated in the Australian fixed interest diversified category were the Vanguard Index Diversified Bond Fund (five stars) and the Portfolio Partners Premier Fixed Income Trust (three stars).
Mortgage funds were also included in the review for the first time, with the review assessing these funds according to a number of criteria including sector and geographic diversification, liquidity management and lending procedures and guidelines.
Two funds in this category were awarded a 5 star rating (Perpetualand the Challenger-owned Howard Mortgage Trust).
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