April, 2021
The Fund aims to provide a total return (after fees, costs and taxes applicable to the Fund) that exceeds the Bloomberg AusBond Bank Bill Index by 2 – 4% per annum, over the medium term. The suggested investment period is 3 years or more.
The Fund is intended for investors who want the potential for positive returns across a range of market conditions, with a low correlation to equity and bond markets. The Fund aims to generate its returns by investing in fixed interest, credit and foreign exchange markets in Australia and globally. The Fund invests primarily in Australia and New Zealand but may also invest in other countries and currencies. The Fund predominantly uses derivatives including swaps, options, futures and forwards to achieve its investment exposures.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/171818946.pdfDecember, 2020
Major equity indices closed the year on a high, aided by President Trump’s unveiling of a new USD$2.3 trillion stimulus bill. The package allayed concerns of a growth relapse as peaking economic trends stoked caution ahead of the holiday season. Continued rollout of the coronavirus vaccine further buoyed sentiment with UK and US regulators authorising use of the AstraZeneca and Pfizer inoculations respectively. However, delays in distribution as well as discovery of a new, more infectious strain of the Covid virus tempered optimism towards the end of the month. In the rates space, developed market yields re-attempted to lift above their short-term highs as upgrades to growth and inflation led some to bring forward the expected date of tapering. US and Australian 10-year treasuries climbed around seven basis points to 0.91% and 0.97% respectively while New Zealand long end sold off 14 basis points to just shy of 1%. While the reflation theme dominated moves in the opening weeks of December, it lost steam in the latter half as guidance from key central banks reaffirmed their dovish commitments. In the US the FOMC decided to maintain their pace of quantitative easing and highlighted that monetary accommodation would persist “until substantial further progress has been made” towards employment and price stability. In Japan, the BoJ left policy rates unchanged but extended aid to pandemic-stricken sectors of the economy by a further six months.
Similar language was echoed by the RBA as Governor Lowe reasserted policy settings from November i.e. the Board needs to see significant improvement in employment and wage growth before a pivot away from the current regime. While our long duration positions detracted from relative performance, we remain advocates of being overweight in bonds. Policymakers today need to achieve passing grades across an expanded macroeconomic scorecard before monetary support is withdrawn. Even with a vaccine in train, this will be an ambitious hurdle in the near term.
At the moment, we see an unevenness to the recovery with small businesses – the bedrock of domestic employment – lagging. Owners here remain unwilling to expand amid an ailing service sector and uncertainty around future lockdowns. The benchmark to tightening policy has also been raised with the Fed moving to average-inflation targeting and, domestically the RBA needing to see actual, not forecast, inflation to sustainably be within their 2-3% band.
Elsewhere, our emerging market positions continued to pay dividends with our short US Dollar against Asian FX bias contributing to alpha over the month. The relative containment of the virus throughout the Greater China zone plus the acceleration of 5G technology has seen a material pick-up in regional manufacturing and exports momentum. We expect this theme to deliver throughout 2021.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/163694977.pdfasset_class: Fixed Income
asset_category: Diversified Credit
peer_benchmark: Fixed Income - Diversified Credit Index
broad_market_index: Global Aggregate Hdg Index
manager_contact_details: Array
ticker: BTA0441AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://investmentcentre.moneymanagement.com.au/factsheets/mi/jvxr/pendal-pure-alpha-fixed-income
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fund_features:
Pendal Pure Alpha Fixed Income aims to provide a total return (after fees, costs and taxes applicable to the Fund) that exceeds the Bloomberg AusBond Bank Bill Index by 2 – 4% per annum, over the medium term. The Fund aims to generate its returns by investing in a portfolio of fixed interest, credit and foreign exchange markets.
- The Fund currently gains its investment exposure by investing into the Pendal Pure Alpha Fixed Income Trust (Trust).
- Investing into the Trust gives the Fund the opportunity to obtain efficiency and scale benefits.
- Primarily invest in Australia and New Zealand but may also invest in other countries and currencies.
- The Fund predominantly uses derivatives including swaps, options, futures and forwards.
structure: Managed Fund