When GSFM launched the Payden Global Income Opportunities Fund on 18 September 2012, most global fixed income products available to Australian investors were what would be classed as ‘traditional’ bond funds.
Traditional bond funds are managed against an applicable bond index, which are generally most heavily weighted to the biggest debtors. Global fixed income indices measure two exposures: country exposure, generally weighted towards those countries that have issued the most debt, and security exposure, also weighted toward those that have issued the most debt. If the index has a longer duration profile, the fund generally reflects that duration too.
While many fixed income funds and most exchange-traded funds maintain this traditional benchmark driven approach, the Payden Global Income Opportunities Fund is one of a small number of unconstrained funds that have emerged over the past few years.
Often positioned as a ‘best ideas’ portfolio, an unconstrained fixed income strategy is one that is not beholden to a benchmark. It is designed to be better able to navigate the complexities of the evolving fixed income landscape and changing economic environment than traditional benchmark aware bond funds. Such strategies are typically managed to outperform a cash or equivalent benchmark, rather than a bond index; this removes constraints around duration, geographic and sector positioning.
It’s proven a popular strategy, appearing on an increased number of APLs, in model portfolios and a growing number of platforms.
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Past performance information provided on this website is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Investing involves risk including loss of capital invested. None of Grant Samuel Fund Services Limited, its related bodies or associates nor any other person guarantees the repayment of capital or the performance of the Fund or any particular returns from the Fund. Please click on this link to read the disclaimer in full.