IO&C recently interviewed Payden & Rygel’s Eric Souder and discussed ways the fixed income manager protects its clients portfolios:

In a timely series of meetings with advisors and bigger investors in Australia last week, Payden & Rygel, the US-based global fixed income manager, provided an interesting overview of the difficulties being faced by investors looking for yield and downside protection.

Fresh from the previous week’s announcement of a major mandate win with Rest – a $500 million absolute returns fixed income strategy which focuses on downside protection – Payden & Rygel’s Eric Souders, a principal and portfolio manager, and Ali Giles, a principal and head of corporate research, posed the question: “where do we go from here?”

Payden & Rygel, represented in Australia by GSFM, has a strong background in short-duration securities, although it has tended to broaden its strategy options in recent years, according to Giles. The privately owned firm was started in 1987, itself a difficult year for markets given the stock market crash and soaring interest rates. It has about US$120 billion under management, about US$12 billion of which is in the absolute return fixed income strategy, targeting a spread of 2-3 per cent above cash. It also uses tactical overlays and beta hedges to assist downside risk control.

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