Last year’s best performing equity manager Millinium Capital has confirmed its reputation as the rising star of Australian funds management after its fixed income portfolio was awarded Morningstar’s top rating.
Millinium has been awarded a 5-star rating, the highest possible, for its Fixed Income Mandate.
The Morningstar award means that three of Millinium’s four portfolios have now been awarded a 5-star rating in either their wholesale or retail versions. The Australian Equities Mandate (for wholesale investors) and the MSF Multi-Strategy Income Option (for retail investors) received five-star ratings in March 2013.
The Fixed Income Mandate (for wholesale investors) is ranked first for performance in Morningstar’s institutional sector survey over one, two and three years to July 2014. It was a clear leader over three years, outperforming the next-ranked fund by an annualised 4.84 percentage points over those three years.
The performance shows Millinium’s skill across the asset classes as it comes after the Australian Equities Mandate beat all other Australian equity funds in the Morningstar survey for the year to June 2014. The equities fund returned a bumper 29.7 per cent and was also the top performing fund over three years with a 25.6 per cent total return.
Millinium chief investment officer Mark Phillips said the Fixed Income Mandate focused on providing absolute returns and was not managed against a benchmark, reflecting Millinium’s strong conviction in its investment ideas and determination to provide consistent returns to investors.
“We believe that a manager that is focused on making positive returns and has the freedom and dexterity to seek quality assets wherever they are available can outperform,” Mr Phillips said. “I think our performance to date bears that out.”
The fixed income portfolio is positioned in a relatively small number of quality bonds, given Millinium’s belief that the US Federal Reserve’s ultra-low interest rate policy is leading to an increasing underpricing of risk and raising the threat of widespread credit defaults.
Head of equities Neill Colledge, who has 35 years of professional investment experience, said Millinium’s funds were positioned conservatively in order to minimise the downside from a likely correction in credit markets, which would also impact equities.
“Global defaults will put upward pressure on local interest rates and downward pressure on local share prices,” Mr Colledge said. “However, the higher quality of Australian credit markets may attract investors who are looking for a safe haven, which will tend to lift the Australian dollar.”