Hi there! Welcome to the new look Pendal website... Take a two minute tour to see what we’ve changed.

Mainstream Online Web Portal

Investors can view their accounts online via a secure web portal. After registering, you can access your account balances, periodical statements, tax statements, transaction histories and distribution statements / details.
Advisers will also have access to view their clients’ accounts online via the secure web portal.

Vimal Gor: Active management more important than ever in defensive portfolios

The days of holding a set-and-forget 60:40 portfolio are over, says Pendal’s Vimal Gor. Investment managers need strategies and sub-strategies within a defensive portfolio. Here’s why

  • 60:40 portfolio construction is no longer enough
  • Investors need to look for more advanced defensive strategies
  • ‘New way of thinking’: Vimal Gor

THE DAYS of set-and-forget portfolios are over and successful investing today requires actively managed defensive strategies, says Vimal Gor, who heads up Pendal’s Bond, Income and Defensive Strategies team.

Traditional investment wisdom says investors can run a portfolio with 60 per cent equities and 40 per cent bonds and get exposure to rising markets while enjoying protection when things turn down.

But policymaker action to keep interest rates low means bonds no longer play the role they once did in a portfolio of providing income alongside downside protection, Gor says.

“People know their fixed income defensive portfolio is broken — they just don’t know what to do with it,” says Gor, speaking at Investment Magazine’s recent Absolute Returns Conference.

“They are navigating this period where the 60:40 portfolio is no longer as relevant as it was in the past.”

Gor recommends investors take a whole portfolio approach and build strategies and sub-strategies within the portfolio that perform at certain times.

“The key thing for clients is that you want to have confidence in the defensive part of the portfolio to perform when you need it.”

Find out about

Pendal’s Income and Fixed Interest funds

The idea is to avoid an asset-class approach and recognise that defensive strategies can be found across the markets, he says.

“It’s like a new way of thinking about it. You’re not so much trying to put together types of asset classes and then getting an outcome, it’s really a focus on the outcome first.

“If the equity markets are all down, what do I need my defensive book to do? And do I have confidence that it will actually work or not?”

Volatility as a strategy

That approach has led Gor to use volatility as a trading strategy, adding equity volatility in recent years and even using cryptocurrency to provide defensive protection.

“It’s really about making sure we’re thinking about the whole portfolio as opposed to saying here’s a fixed income fund.”

Relying on bonds and traditional portfolio construction strategies is effectively equivalent to using old technology, he says.

“We’ve got to this point where there’s complete death for the 60:40 portfolio and if we get bond yields rallying further well then risk parity is largely dead as well.

“But then how do you think about building that defensive path?

“If you don’t use volatility and you don’t use equity vol and you don’t use strategies like intra-day momentum – these kinds of things which are proven to be defensive – well then just relying on an old product set isn’t going to get you to where you want to be.”

About Vimal Gor and Pendal’s Income and Fixed Interest boutique

Vimal Gor is a portfolio manager with Pendal’s Income and Fixed Interest team.

Pendal’s Income and Fixed Interest boutique is one of the most experienced and well-regarded fixed income teams in Australia. In 2020 the team won the Australian Fixed Interest category in the Zenith awards.

With the goal of building the most defensive line of funds in Australia, the team oversees A$22 billion invested across income, composite, pure alpha, global and Australian government strategies.

Find out more about Pendal’s Income and Fixed Interest strategies here

About Pendal Group

Pendal is an independent, global investment management business focused on delivering superior investment returns for our clients through active management.

Contact a Pendal key account manager

This article has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and the information contained within is current as at September 22, 2021.

This article is for general information purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient’s personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation.

The information in this article may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information in this article is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information.

Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance.

Any projections contained in this article are predictive and should not be relied upon when making an investment decision or recommendation. While we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections.

The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund.

Keep updated
Sign up to receive the latest news and views