Annual Report 2017

Investment Strategies

Income & Fixed Interest

The Income & Fixed Interest portfolios include a range of investment strategies covering Australian and international bonds, unconstrained absolute return, as well as income-orientated solutions and cash funds.

One of the most significant differentiators of our team’s flagship strategies is its defensive positioning, founded on our solid fundamental research approach.

Our investment style is true-to-label defensive fixed interest, with bond funds that are designed to complement the performance of riskier assets, such as equities. This means they are poised to perform well during periods of market stress and high volatility, acting as an insurance component of a broader investment portfolio.

Our experienced team has a rigorous investment process, supported by in-depth macroeconomic and quantitative research.

To support our ongoing growth momentum, over time we have steadily expanded the team. Early in 2017 we hired two senior portfolio managers, Tim Hext and Amy Xie Patrick, to extend and complement the team’s skills and experience. Since joining the team, Tim and Amy have made valuable contributions to the development of our process, trade ideas and portfolio implementation.

During the financial year, the continuing growth of our flagship strategies was underpinned by strong client endorsement, supported by outperformance across our income, credit and cash strategies.

Flagship strategies continued to attract new fund inflows, highlighting that our differentiated approach is resonating with clients.

Our BT Wholesale Fixed Interest Fund has steadily grown to over $850 million and our flagship income solution, the BT Wholesale Monthly Income Plus Fund, has grown to almost $700 million, including a new mandate on one of Australia’s largest platforms.

The last 12-18 months have seen markets accepting more risk despite growing geo-political concerns and increasing leverage in companies and households. This means that a defensive position is warranted more than ever.

Our clients understand how important our approach is for their portfolios, which is why we continue to be shortlisted for inclusion in new investment portfolios.

We believe the market environment is transitioning in line with the end of accommodative central bank policies. As a result, we are seeing market volatility increase and this should progressively result in more accurate pricing of risks. This will negatively impact risk assets that we believe are priced to perfection, including high yield credit, parts of emerging market debt and certain parts of equity markets.

We will soon be launching a new dedicated long volatility strategy for clients looking for a liquid alternatives strategy that can provide risk protection whilst still delivering a positive return in normal market conditions. This is an extension of the process we currently utilise in our alpha strategies, although this product's structure will feature a systemic and multi asset approach. We are seeing strong client interest and we believe this will continue to help our boutique differentiate itself in this competitive market.

We believe our investment process and philosophy will continue delivering and meeting client expectations in this increasingly volatile environment.