Black Rock credits success to ‘think global, act local’ strategy

Russell Maddox

A “truly global credit” strategy to managing credit was instrumental in BlackRock Investment Management winning the credit category of the Money Management / IMCA Fund Manager of the Year Awards 2007, according to co-chief investment officer and head of fixed interest Russell Maddox.

Maddox said the strategy of “turning international credit securities into Australian credit securities” had differentiated BlackRock from its competitors in the credit space, and would have done the same against competitors in the awards.

“Essentially, what we mean by ‘global credit’ strategy is that if we are doing credit mandates for Australian investors we buy credits from all around the world and swap them back to Australian dollars.

“The corollary to this approach is, say, if BHP wanted to raise $500 million it would go to the US credit market, borrow it in US dollars, and swap it back to the Australian dollars it wants.”

A finalist in this category, Colonial First State (CFS) has a number of credit funds where the credit risk is actively managed for return, and where there is no active duration exposure taken.

CFS co-head of global fixed interest and credit Tony Fitzgerald said the major aspect separating the fund manager from its competition was the way it measured and managed credit risk from a risk/reward perspective.

“This process leads us to establish a highly diversified fund with over 460 individual exposures from 32 countries and 61 industries,” he said.

Pimco Australia executive vice-president Rob Mead said the fund manager had consistently focused on building well diversified portfolios with a strong risk control focus.

“As markets have evolved it is our experience, our people and our ability to continually incorporate new technologies and instruments into our portfolios, while staying true to our long-term strategies, which has allowed us to continually add value for our clients,” he said.