Vanguard, Pimco top fixed interest class
Index hugger Vanguard and specialist bond manager Pimco have been rated the pick of international fixed interest managers by research group Morningstar.
In its latest sector wide review of global fixed interest managers, released today, Morningstar awarded both Pimco and Vanguard a ‘highly recommended’ rating - the research house’s highest overall ranking.
The two fund managers’ flagship international fixed interest funds - the Pimco Global Bond fund and the Vanguard Wholesale International Fixed Interest Index fund - were given a five star rating.
Other mangers to perform well were Barclays Global Investors, BT alliance partner Blackrock and Macquarie, all of whom were handed a ‘recommended’ rating by Morningstar.
The research house’s report into the sector said government-only global bond managers had struggled to add value after fees and would continue to do so.
It said the research house favoured index managers, which have cheaper fees, over government bond exposure, and proven “broad market-based” managers to make the most of opportunities in the non-government bond market.
“Our top picks were Vanguard and Pimco for each of the above,” the report said.
Morningstar said it was becoming increasingly difficult for managers to add value in the global fixed interest market.
“The changing nature of the global bond market makes it increasingly difficult for fund managers to add value from the two traditional strategies of active interest rate and currency management,” the research house said.
“While interest rate management is still an important strategy, particularly in a rising interest rate environment, in itself, an interest rate strategy is no longer a key and reliable alpha source.
“Our analysis suggests that employing a broad market based strategy, which attempts to exploit inefficiencies in both the government and corporate credit markets, is the more consistent and sustainable way of adding value in global bonds.”
Recommended for you
Net cash flow on AMP’s platforms saw a substantial jump in the last quarter to $740 million, while its new digital advice offering boosted flows to superannuation and investment.
Insignia Financial has provided an update on the status of its private equity bidders as an initial six-week due diligence period comes to an end.
A judge has detailed how individuals lent as much as $1.1 million each to former financial adviser Anthony Del Vecchio, only learning when they contacted his employer that nothing had ever been invested.
Having rejected the possibility of an IPO, Mason Stevens’ CEO details why the wealth platform went down the PE route and how it intends to accelerate its growth ambitions in financial advice.
