Principal back in the fixed income groove
Principal Global Investors (PGI) Australia has re-entered the Australian fixed income market following the expiry of a non-compete contract clause in its US-parent’s sale of BT Financial Group to Westpac Bank in 2002.
PGI Australia, the local arm of Principal Global Investors, has launched a unit trust specialising in US high yield and preferred securities, and up until now was bound by an 18-month, non-compete agreement in the fixed income space.
The Global Strategic Income Fund combines high yield securities, preferred securities and a selection of other securities globally.
The portfolio will be co-managed by Principal managing director, Asia Pacific fixed income Rob da Silva in Australia and US-based portfolio manager Mark Denkinger.
Principal has also brought in two specialist managers for the fund — Post Advisory Group, which will manage the high-yield component, and Spectrum Asset Management, the largest global preferred securities manager, to manage that sector of the fund. Post and Spectrum were acquired by Principal in 2003 and 2001 respectively.
Da Silva says many similar products are now facing structural problems.
“Mortgage trusts and hybrid funds in Australia are bursting at the seams and finding it difficult to put their money to work,” da Silva says.
Being able to leverage global opportunities in the fund not only increases diversification but also eliminates capacity constraints, according to da Silva.
As it is being launched in Australia, it could also be something of a test case, with Principal Global Investors chief executive Jim McCaughan commenting that if successful, the product could be replicated in the US and UK.
The fund was seeded in May with US$25 million, and Principal is currently in discussions with a number of platforms regarding adding the fund to their investment menus.
Recommended for you
The strategic partnership with Oaktree Capital and AZ NGA is likely to pave the way for overseas players looking to enter the Australian financial advice market, according to experts.
ASIC has cancelled a Sydney AFSL for failing to pay a $64,000 AFCA determination related to inappropriate advice, which then had to be paid by the CSLR.
Increasing revenue per client is a strategic priority for over half of financial advice businesses, a new report has found, with documented processes being a key way to achieving this.
The education provider has encouraged all financial advisers to avoid a “last-minute scramble” in meeting education requirements prior to the 31 December 2025 deadline.
