Nikko Asset Management Australia, a Nikko AM group company with offices in Australia, manages the Australian Fixed Income strategy. The strategy aims to achieve outperformance, with a strong focus on diversifying the portfolio's sources for value-adding activities to achieve lower portfolio risk.
- Active, opportunistic and disciplined investment style
- Diversified across all Australian fixed income sectors with a multi-strategy approach via duration, curve positioning, sector rotation and credit
- Strong focus on risk control and liquidity
- Only invests in securities rated BBB- and above
- ‘Top-down’ fundamental research, merged with ‘bottom-up’ quantitative portfolio construction and credit analysis
- 70-130 securities
The investment philosophy is based on identifying pricing anomalies through a unique combination of fundamental economic analysis and in-depth valuations. Inherent in this philosophy is the belief that markets are often incorrect in forecasting short- and medium-term influences and conditions. The team aims to identify and exploit the resultant market mis-pricing via macroeconomic analysis, disciplined risk and return analysis, and in-depth valuations. This involves developing a deep understanding of both the wider macroeconomic landscape and the governments/companies/organisations in whose bonds they invest. Through in-depth research and analysis of the investable universe, Nikko AM Australia identifies and assesses market risks, investment opportunities, and risk and return expectations. Although investment ideas are sourced from a wide variety of both internal and external sources, the team's investment approach is independent and valuation-driven.
The investment process is based on a rigorous, research-driven approach, with strong risk control to identify areas for long-term alpha generation. The team believes in a balanced approach to fixed income, rather than one single strategy or alpha source, allowing them to take advantage of opportunities in all parts of the fixed income markets. The team identifies current conditions, how they are likely to change and the risks of this outcome not eventuating to determine how to best exploit the market using a variety of strategies prevalent at the time and expectations of changes in the future. The ability to use duration, curve positioning, sector rotation and other trading strategies ensures that excess returns can be generated from multiple sources in all market conditions.