Learn globally, act locally
PIMCO's win in the Money Management/Lonsec Fund Manager of Year Awards for the Fixed Interest category marks the third year in a row that its EQT Wholesale Global Bond Fund has been in the top three, winning in 2011 and becoming a finalist in 2012.
The fund, which is managed from the US by PIMCO founder and long-term chief investment officer Bill Gross, has taken overweight positions in emerging markets in the past 12 months while shying away from established markets, particularly Europe.
PIMCO head of marketing and distribution Peter Dorrian said the shift to emerging markets was important for the fund, representing a significant change in thinking over the past four to five years.
"Global bonds have become more complex than they were five years ago and the notion of risk has changed, so we have looked at more sources of investments to ensure we maintain our first priority of capital preservation," Dorrian said.
"The key thing that has set us apart has been the breadth and depth of our research, with our analyst's tasked to check ratings and conduct research on companies and governments' ability to issue debt," Dorrian said.
Schroder also marks a return to this category as a finalist this year with the Schroder Fixed Income Fund, having won the sector in 2012 and being a finalist in 2011. Schroder head of fixed income and multi-asset Simon Doyle said the challenge for the team of 11 working on the fund was: what assets did it make sense to own and what risks should concern them?
"Fixed interest investing needs to provide defensive assets and performance relative to the benchmark, and we saw the best way to do this was to get the asset allocation in place first then select the underlying holdings," Doyle said.
Doyle said the team looked broadly and invested in cash, credit, corporate and government bonds, and the domestic mortgage market.
"We took an active slant to generate returns at lower risk, but also applied a broad asset allocation approach to provide context when picking the fund holdings to avoid unnecessary risks," Doyle said.
Also coming in as a finalist was the Advance Wholesale International Fixed Interest Multi-blend Fund. Ron Mehmet, Advance portfolio manager for defensive asset classes, said the success of the fund was laid down three years ago when it changed its line-up of underlying managers.
"We did that at a time of growing European sovereign debt crises and the first Greek bail-out, and it worked as a stress test of the managers and strategy we had chosen. We have seen both of those come to the fore since then," he said.
Mehmet said the fund, which operates with a team of 15, reduced its allocation to developed markets and sought either emerging market investments or those that carried less volatility.
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