A fastidious approach and dedication to ESG

George Bishay has been in the financial services industry for 25 years and has been named one of FE fundinfo’s Alpha Managers.

The Pendal fixed income fund manager said he started out in the industry in accounting at Westpac Investment Managers, then moved into a front office role as an assistant portfolio manager, became a money market portfolio manager, a repo trader, and credit analyst all within Westpac IM and the different owners the firm had experienced, including Pendal, where he now manages a combination of composite bond portfolios.

Bishay said his success in achieving a consistent outperformance was his fastidious approach to everything as he was not comfortable just taking information in at face value.

“I tend to dig deeper into any information when analysing credit issuers and markets and this helps to decipher what marketing versus reality is,” he said. 

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He said this helped when analysing companies and the ability to judge whether somebody was speaking truthfully or using marketing spin.

“I also have a solid macro-economic foundation when determining the macro drivers and how that impacts global markets and follow through impact on Australian assets and thus how the portfolio should be positioned in a forward-looking fashion,” Bishay said. 

Bishay noted that quantitative analysis was the backbone of his investment process. He said quantitative models were used to give a bias in direction of markets.

“We’re not looking for a valuation per se, we’re analysing market directional bias, that is looking if credit spreads are going to widen or tighten or rates going up or down. We do this via a combination of quantitative models, apply our qualitative view and then use technical analysis to get us in and out of markets,” he said. 

He said one of the biggest lessons he had learnt over his career was the importance of focusing not only on the bottom up fundamentals but also the top down macro view.

“If the market is going against you, you need to ensure that you don’t sit there idlily and hope for the best but move that portfolio around,” he said.

Bishay currently runs a sustainable fixed income fund and said advisers looking for a manager that ran an impact, sustainable or environmental, social, or governance (ESG) focused fund needed to look at the tenor of the dedicated ESG portfolio.

“There are a lot of my peers that have always done ESG via quasi governance structure. And that is a correct statement because G is always a factor when you’re analysing credit. 

“But a lot of managers now via the requirements of their clients have said they have integrated ESG into their process for many years. This is somewhat questionable especially the E and S factors but it’s something that’s only been spoken about in the last year or two. We at Pendal Group have managed dedicated sustainable (ESG) fixed interest portfolios since 2009. 

“Advisers also need to look at how detailed their manager’s ESG analysis is and how committed the business is to ESG as a whole.” 
Bishay said the manager also needed to show the benefits of the E,S, and G as opposed to just talking about it.

“They need to be able to explain how ESG factors have impacted credit spreads,” he said.