Australian fixed income funds outperform benchmark
Managing liquidity risk and preserving capital to adapt to multiple market environments are the tweaks to strategy that have seen Macquarie rise swiftly in the Australian fixed income sector, holding three of the top five best performing funds in the period May 2014 -May 2017, according to FE Analytics
Macquarie’s Core Australian Fixed Interest saw annualised returns of 5.21 per cent over the three-year period May 2014-Mary 2017 with a one year return of 3.12 per cent – an 0.04 per centage point lead over its competitors. The fund came in ahead of the BlackRock Enhanced Australian Bond and the Legg Mason Western Asset Australian Bon Trust, which saw three year returns of 5.17 per cent and 4.98 per cent respectively, followed by the Macquarie True Index Sovereign Bond (4.89 per cent) and the Macquarie Australian Fixed Interest (4.88) to round out the top five best performers.
Commenting on the successful returns of the Core Australian Fixed interest fund, Macquarie senior portfolio manager, Dave Ashton said the strong demand for the fund manager’s flexible strategies has yielded the positive results.
“Our philosophy focuses on capital preservation, managing liquidity risk and fundamental analysis, and is the result of our in-depth proprietary research over many years,” he said.
“This approach continues to differentiate our performance and help us meet our clients’ expectations, reflected in strong demand for the strategies.”
FE Analytics shows that the fund is in the top quartile for risk-adjusted returns as measured by the Sharpe ratio. Macquarie Core Australian Fixed Interest’s Sharpe ratio stands at 0.68 for the period in question, compared with 0.16 from its average peer.
Ashton said these well-practiced allocation approaches behind the fund would remain in place over the coming 12 months, with the continued performance rate likely in the market environment as the fund widened its gap from the sector average.
“Given the current low bond yield and low cash rate environment we believe clients need to be able to access investment strategies that can adapt to the environment,” he said.
“To help achieve this we look to avoid taking large correlated positions and instead focus on a more dynamic approach investing in a wide range of diversified sources of return.
“We are also very active in the management of our allocations to credit and have dialled down our allocation as the value on offer has reduced – we don’t want to get caught up in the ‘chase for yield’.’
The fourth and fifth best performing funds over the same time period, the Macquarie True Index Sovereign Bond and the Macquarie Australian Fixed Interest had also seen results above the sector average since October 2014, with the True Index Sovereign bond the sectors highest performer between November 2014 and May,2015 and again between January 2016 and October 2016.
AUTHOR
Hope William-Smith
Recommended for you
Clime Investment Management has faced shareholder backlash around “unsatisfactory” financial results and is enacting cost reductions to return the business to profitability by Q1 2025.
Amid a growing appetite for alternatives, investment executives have shared questions advisers should consider when selecting a private markets product compared to their listed counterparts.
Chief executive Maria Lykouras is set to exit JBWere as the bank confirms it is “evolving” its operations for high-net-worth clients.
Bennelong Funds Management chief executive John Burke has told Money Management that the firm is seeking to invest in boutiques in two specific asset classes as it identifies gaps in its product range.
