Specialist Diversified Fixed Income Fund

Transcription

1 Specialist Diversified Fixed Income Fund Manager Profile January 2016 Adviser use only

2 Investment Process Specialist Diversified Fixed Income Fund Investment process for this Fund is structured in the following steps: Step 1 Objectives: AMP Research, in consultation with Licensees, determines the investment and operational objectives for the AMP Research sector Model Portfolio. These are adopted as objectives for this Fund. The investment objective for this Fund is to provide a total return (income and capital growth) after costs and before taxes, above the Fund s performance benchmark, over a rolling 3 year basis. The performance benchmark is the weighted average return of the relevant market indices used to measure the performance of each specific asset class in which the Fund invests. Australian Bonds International Bonds Bloomberg AusBond Composite Bond All Maturities Index Barclays Capital Global Aggregate Bond (Hedged to AUD) 60% 40% Step 2 Manager Selection: AMP Research supplies to AMP Capital with manager names that are included in its Model Portfolio. The underlying manager line up of the Fund may deviate from that of the Model, for a number of reasons. For example, some of the desirable managers may not be available to retail investors and therefore cannot be included in Model Portfolios but are accessible by AMP Capital as an extension of its institutional relationships; and/or Investment strategy and portfolio construction considerations. The investment capabilities of underlying managers are reviewed annually at their business premises, in addition to on-going monitoring and research meetings throughout the year. Step 3 - Portfolio construction: Manager weights and exposures within the Fund are managed to minimise undesired exposures and to ensure that the Fund has an access to diversified sources of excess returns throughout the cycle. Step 4 - On-going exposures and risk monitoring and management: Underlying exposures of the Fund are monitored and managed by AMP Capital on an on-going basis, using best practice systems and methodologies. The Fund blends a portfolio of strategies that invest in Australian and international fixed income securities including government bonds, government-related securities, corporate bonds, asset-backed securities, cash, derivatives and foreign currency. Global bonds 40% Australian bonds 60%

3 Underlying Manager Composition Name Style Approach Role in the Fund Target Allocation (%) AB Absolute Return This manager actively rotates its sector exposures to reflect the most compelling opportunities in the global markets at any given time. This strategy is likely to be lowly correlated to core fixed income markets across a full market cycle, and therefore offers diversification benefits across global markets. Its rotational approach is expected to add value. 20 AMP Capital Valuation focus Pursues interest rate strategies such as duration and yield curve, along with exposure to Australian credit market and foreign currency positioning. Forms a core part of the Fund s exposure to Australian Fixed Income. Its return profile is expected to be relatively consistent across both risk on and risk off markets. 25 PIMCO Active, long term focus Avoids extreme swings in duration or maturity with a view to creating a steady stream of returns. Historically invests 50% of its assets in the PIMCO Australian Bond Fund and 50% of its assets in the PIMCO Global Bond Fund. Offers diversified exposure to both Australian and international fixed income, across government, credit and securitised sectors. 35 Schroders Liquidity Quality Portfolio is constructed on the foundations of liquidity, capital preservation and diversification to equity risk. Forms a core part of the Fund s exposure to Australian Fixed Income. Expected to deliver a stable, positive return over time. 20 Total Defensive Diversification to Growth assets An all weather fixed income portfolio designed to capture multiple sources of return using highly regarded, retail oriented managers This Fund is designed to have comparatively defensive characteristics. This said, due to its exposure to credit and to securitised sectors, its returns may be more pro-cyclical compared to government debt only funds. 100

4 AB AllianceBernstein Dynamic Global Fixed Income Fund Investment objective Benchmark Aims to achieve returns that exceed the Bloomberg Ausbond Bank Bill Index after fees over 5 year periods. Bloomberg Ausbond Bank Bill Index Manager Overview AB aims to deliver attractive risk-adjusted returns by targeting the fullest possible array of investment opportunities within global fixed income markets, while at the same time reducing risk. Notwithstanding the performance objective to achieve returns that exceed Australian bank bill rates, AB is not constrained to a traditional bond benchmark in its investment process and, instead, invests globally in a broad range of sectors and securities with low correlations to each other. AB was selected for their rigorous investment process, along with their depth and experience in various fixed income sectors. Investment Philosophy AB believe that fundamental and quantitative research are complementary approaches to identifying better return opportunities. AB emphasise diversification within this strategy, which has the dual benefit of maximising potential returns whilst simultaneously mitigating risk. Style The AllianceBernstein Dynamic Global Fixed Income Fund targets absolute rather than relative returns. The Fund implements a global, multi sector strategy investing in a broad range of debt securities. The Fund can hold cash (cash is intended to make up 5% or less of the Fund s assets). AB may hold corporate bonds, government bonds, asset backed securities, mortgage backed securities, bank loans and derivatives, located anywhere in the world, including opportunistically allocating to emerging countries. Sovereign Credit Australia Developed Emerging Opportunistic Core Opportunistic Opportunistic Core Opportunistic Securitised Opportunistic Core Opportunistic Investment Team The Absolute Return Fixed Income Portfolio Management Team consists of 10 investment professionals, averaging 20 years of industry experience. The team is incorporated within the globally-integrated research and portfolio management platform, including portfolio managers and research analysts in 46 local offices in 21 countries, as of September Investment Process The strategy is absolute return in nature, with AB using a combination of quantitative and qualitative research when selecting individual securities and sizing positions. By opportunistically taking advantage of mis-pricings across countries, sectors, securities, and currencies, AB are able to uncover opportunities and identify downside risks. Allocations amongst sectors are rotated to reflect the most compelling opportunities in the global markets at any given time. The fund utilises both quantitative and qualitative risk controls. Role in the Fund AB provides absolute return global fixed income exposure which should be lowly correlated to other managers in the AMPCI Specialist Diversified Fixed Income Fund. AB offer diversification and access to various return streams not available in traditional Australian fixed income. Please refer to the Fund PDS & AB website for full description of features, benefits and risks.

5 PIMCO PIMCO Diversified Fixed Interest Fund Investment objective Benchmark To achieve maximum total return by investing in underlying funds that invest in Australian and overseas bonds, and to seek to preserve capital through prudent investment management. 50% Barclays Global Aggregate Hedged AUD, 50% Bloomberg AusBond Composite 0+ Yr Index. Manager Overview PIMCO are a large global investment manager appointed to manage Australian and international fixed interest. PIMCO were appointed for their structured investment process, global reach, depth of resources, and focus on creating a steady stream of returns. Investment Philosophy PIMCO s philosophy is founded on the principle of diversification. PIMCO are able to diversify across strategies and sectors, enabling them to access multiple sources of returns across the world s fixed income markets. PIMCO believes that focusing on long-term, secular trends offers the greatest opportunity to add value relative to the overall market, which is largely preoccupied with pricing in short-term factors. Style PIMCO aims to construct diversified portfolios that do not hold concentrated exposure to any single issuer. PIMCO s investment style emphasises active decision making with a longterm focus, and seeks to avoid extreme swings in duration or maturity with a view to creating a steady stream of returns. The Fund aims to offer reasonably consistent returns relative to benchmark across a full market cycle. Australia Developed Emerging Sovereign Core Core Opportunistic Credit Core Core Opportunistic Securitised Opportunistic Core Opportunistic Investment Team PIMCO has significant depth across all segments of the global fixed income markets combined with on the ground specialist teams in the major local markets. PIMCO is one of the largest active fixed income managers globally. Investment Process PIMCO applies a wide range of diverse strategies including duration analysis, credit analysis, relative value analysis, sector analysis and rotation, and individual security selection. PIMCO has high quality robust systems and processes; complemented by a global network of relationships across debt markets. Role in the Fund PIMCO offer diversified exposure to both Australian and international fixed income, across government, credit and securitised sectors. PIMCO primarily augment the AMPC Specialist Diversified Fixed Income Funds exposure to global fixed income.

6 Schroders Schroder Fixed Income Fund Investment objective Benchmark To outperform the benchmark by 1.0%-1.5% p.a. before fees over rolling 3 year periods; and to deliver positive absolute returns over the full cycle. Risk is defined as the potential of not meeting this objective, rather than volatility or tracking error. Bloomberg AusBond Composite Index 0+Yr Index Manager Overview Schroders were appointed to invest in Australian fixed income securities. The portfolio is constructed on the foundations of liquidity, capital preservation and diversification to equity risk. Investment markets are assessed through Schroders Valuation, Cycle, and Liquidity framework. The decision to appoint Schroders was based on their conservative approach to fixed income, experienced investment team and proven investment approach. Investment Philosophy Schroders believes that successful fixed income investing captures diversified sources of risk and return, and that getting the overall asset allocation (across sovereign bonds, credit, securitised and cash) right is the single most important determinant of returns over time. Style Schroders is best described as a defensive manager with a specific emphasis on liquidity and quality. It pursues a fully active approach, including asset allocation (across credit, interest rate and geography), security selection and risk management, with topdown thinking driving portfolio construction. Given the explicit focus on downside protection, the fund may lag some of its peers in risk-on markets. Australia Developed Emerging Sovereign Core Opportunistic Opportunistic Credit Core Opportunistic Opportunistic Securitised Opportunistic Opportunistic Opportunistic Investment Team This team is well respected within the industry and is well resourced with 14 fixed income professionals in the Sydney office. It benefits from cross-fertilisation of views and ideas within the broader Schroders group, and is supported by the firm s global investment capabilities. Investment Process Schroder s robust investment process is value-based, combining extensive qualitative and quantitative research. Schroders views research as an important discipline and tool in the portfolio construction process, however the portfolio s positioning and exposures also reflect the team s fundamental judgement. Role in the Fund This portfolio is designed with an eye to delivering a stable, positive return over time. Therefore it is designated as a core Australian defensive allocation within the Specialist Diversified Fixed Interest Fund (which itself presents a broadly diversified fixed income portfolio) with an emphasis on preserving capital, providing liquidity and diversifying equity risk.

7 AMP Capital AMP Capital Wholesale Australian Bond Fund Investment objective Benchmark To outperform Bloomberg AusBond Composite 0+Yr Index by 50bp p.a. before fees over the long term. Bloomberg Ausbond Composite Index Manager Overview AMP Capital s portfolio invests in a blend of quality fixed income assets. The portfolio is focused primarily on Commonwealth and semi-government bonds but also allocates to credit sectors across a range of industries. The portfolio is designed to add value from a variety of sources, including interest rate strategies such as duration and yield curve positioning, sector allocation, and foreign currency. AMP Capital was selected on the basis of its broad array of investment strategies, applied by an experienced team of sector specialists. Investment Philosophy AMP Capital s core belief is that active management can add value to portfolios over the longer term. AMP Capital identify value and manage risk via a combination of top down macro (interest rate, currency and credit) and bottom up (credit or issuer specific) research. Style Valuation forms the core of the investment process, with the value orientation typically expressed through sector positioning. AMP Capital use a flexible, yet risk controlled investment process driven by a quantitative assessment of various factors that influence assets prices. AMP Capital s return profile is expected to be relatively consistent across risk on and risk off markets. Australia Developed Emerging Sovereign Core Opportunistic Opportunistic Credit Core Opportunistic Opportunistic Securitised Opportunistic Opportunistic Opportunistic Investment Team The AMP Capital team is one of Australia s largest fixed income teams and has an average of 15 years industry experience. The AMP Capital Fixed Income team has investment offices in Sydney, Hong Kong and Chicago, benefitting from specialist capabilities and additional investment insights across various segments of global debt markets. Investment Process AMP Capital employs a well-structured, repeatable investment process which uses numerous rigorous and tested models and indicators. Qualitative overlays complement their quantitative work. AMP Capital utilises a formalised risk budgeting framework via a dedicated quantitative support team to ensure all risks are appropriately accounted for. Role in the Fund The AMP Capital Wholesale Australian Bond Fund provides the AMPC Specialist Diversified Fixed Income Fund with broad Australian fixed income exposure.

8 Important note The information in this presentation is provided only for the use of advisers/financial planners; it is not intended for investors. The adviser/financial planner remains responsible for any advice/services they provide to clients including making their own inquiries and ensuring that the advice/services are appropriate and in accordance with all legal requirements. Therefore, advisers/planners must not attribute any advice/service to AMP Capital Investors Limited (ABN , AFSL )(AMP Capital) or in any way suggest that AMP Capital or any member of the AMP Capital Group is the author of any part of that advice/service. AMP Capital Funds Management Limited (ABN ) (AFSL ) (AMPCFM) is the responsible entity and issuer of units in the Specialist Diversified Fixed Income Fund (Fund). To invest in the Fund, investors will need to obtain the current Product Disclosure Statement (PDS) from AMP Capital. The PDS contains important information about investing in each Fund and it is important that investors read the PDS before making a decision about whether to acquire, or continue to hold or dispose of units in the Funds. Neither AMP Capital, AMPCFM nor any other company in the AMP Group guarantees the repayment of capital or the performance of any product or any particular rate of return referred to in this document. While every care has been taken in the preparation of this document, AMP Capital makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor s objectives, financial situation and needs. Each of the managers listed in this document has consented to the inclusion of, and the statements contained in, the relevant manager profile in this document.