We offer a range of global and enhanced fixed interest, managed and enhanced cash, and credit capabilities.

Pendal’s income and cash portfolios use disciplined investment processes that capture benefits for clients. Our strong risk management systems ensure security and stability.

Our head of Bond, Income & Defensive Strategies Vimal Gor joined Pendal in November 2009 with responsibility for Sovereign Fixed Interest. He was appointed to lead the boutique in June 2010.

Vimal is responsible for all our income and fixed interest funds and managing the Bond, Income & Defensive Strategies team.

WATCH: Vimal Gor outlines the Bond, Income & Defensive Strategies team’s investment approach:

Our portfolios employ a particular investment style, using a quantitative foundation with a qualitative overlay.

A key part of the process is how we combine economic and market model data with our economic, market and credit issuer views. This allows us to construct portfolios that aim to generate outperformance while remaining well balanced and risk controlled.

There are three key ways our “truly active” approach differs from a conventional active fixed interest manager:

  1. Our duration trading strategies tend to be shorter in time frame with profits realised more regularly and losses stopped according to strict stop loss criteria.
  2. Beta (market risk) is separated from alpha (additional return driven by skill). The aim is to produce that base return and then add alpha relative to that benchmark.
  3. The investment process utilises a broader opportunity set than traditional Australian fixed interest managers to drive alpha. This gives a much more diverse toolkit with which to drive return when compared to most other managers – a toolkit that has been developed over many years’ experience.

An important part of the approach is striving to ensure that each of the strategies implemented are uncorrelated so that the portfolio’s active performance will not be determined by a single, or few, outcomes or themes in the market place. This should deliver a more consistent active return profile over time.

Our products include:

Environmental, Social and Governance (ESG) integration

Where ESG factors are considered material to risk and return outcomes, they are incorporated into the Bonds, Income & Defensive Strategies investment process.

Time horizons and materiality of ESG factors vary across asset classes as well as by strategy in fixed income. For example, value added from incorporating ESG factors into fixed income analysis relates more to risk mitigation than other asset classes.

We integrate ESG factors into the investment process with a combination of internal and external sources of information:

Internal

  • ESG Research: proprietary research developed by Regnan – our in-house ESG specialist team – to support ESG integration, sustainability and impact assessments, and ethical screening.
  • ESG Specialists: the Regnan team, Pendal Responsible Investments team, and specialists within our Investments and Product teams.
  • Responsible Investment Working Group: this cross-function group monitors and reviews industry trends, standards, issues and practices that are relevant to the maintenance and development of Pendal’s RI framework.
  • Pendal’s Equity teams: provide a significant internal resource that engages with investee company management directly and share insights across ESG issues. BIDS portfolio managers and analysts also perform ESG analysis and engagement with issuers.

External

  • ESG Research: provided by a global third-party provider to complement and support internal ESG integration, sustainability and impact assessments, and ethical screening.
  • Ratings Agencies: have begun to incorporate ESG factors into their credit ratings process. This is increasingly becoming an important additional ESG resource.
  • Industry, Academia and Broker research: where relevant to investment strategy and as a best practice reference.

ESG Engagement

Pendal leads engagement with investee company management on ESG issues. Active engagement can enhance the quality of information available to the market more generally, as well as facilitate improved oversight and management of these matters across a range of market participants.

The Bonds, Income and Defensive Strategies team is committed to supporting Pendal’s responsible investment practices, including through sustainable and ethical products.

The team goes beyond engagement to support ESG risk management and engages for sustainability and impact outcomes.

We do this, for example, by encouraging issuers to enhance their ambition concerning ESG-related goals, address negative social or environmental impacts, as well as strengthen or formalise commitments to delivering on impact outcomes.