Why leave the best fixed income opportunities on the table when rates are so low, asks portfolio manager


Jarod Dawson

Australian investors are leaving “a lot of opportunities on the table” by restricting themselves to domestic fixed income securities when they can least afford to, says Jarod Dawson, Portfolio Manager of the PM Capital Enhanced Yield Fund (EYF).

Mr Dawson said: “With official interest rates at a record low of 0.75% in Australia, investors more than ever need to look globally to access the best risk/ reward opportunities – ie to identify the true anomalies in global fixed income markets.

“If you don’t, you may be exposing yourself to more volatility and less return than you need to in what people typically think is a relatively safe sector.”

“Australia makes up such a small fraction of global fixed income markets that unless you’re investing capital globally, you’re really leaving a lot of opportunities on the table.”

Research house Zenith Investment Partners has just reiterated its “Recommended” rating on EYF, which targets a return in excess of the RBA’s official cash rate, with a regular income stream, and an emphasis on capital preservation and low volatility.

Mr Andrew Yap, Zenith’s Head of Multi-Asset and Australian Fixed Income, said of EYF: “Underpinning our conviction is our high regard for its long-standing portfolio manager that has the skills and experience to successfully manage the fund, with strong support provided by the broader PM Capital team, and their demonstrated track record of successfully navigating the fund through a range of market conditions, consistently delivering upon its performance objectives.”

Mr Dawson said: “We don’t think just getting a broad exposure to fixed income markets is effective. It’s really about picking the eyes out of what we think are the absolute best fixed interest investments around the world. And then when we find them, we put a meaningful amount of capital into them.”

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