Perennial Fixed Interest is a specialist, active fixed income and cash manager. The ‘Perennial Fair Value’ approach focuses on modelling and valuing the medium term economic and market fundamentals using a disciplined decision making framework. The Perennial Fixed Interest process involves constantly assessing new information to refine our view of value and compare that to current market prices. The team use internally developed models to derive a fair value term structure for interest rates.
Our investment philosophy and process
Perennial Fixed Interest access a range of diversified strategies to add value to our investors. Perennial Fixed Interest's principle focus is developing strategies that are in the best long-term interests of our clients. The Team is not unduly influenced by the structure of the relevant portfolio benchmark. Perennial Fixed Interest believe that investment markets can often get carried away with the prevailing market sentiment and exploitable fixed income investment opportunities are created for long-term investors. It is often Perennial Fixed Interest's style to implement an investment strategy that is against the current market mood.
Perennial Fixed Interest is strategic in approach, believing the best decisions are made through the careful assessment of economic and market fundamentals over the medium to long term. Conviction and patience are very important elements of Perennial Fixed Interest's investment style: the conviction to trust judgement in constructing portfolios and the patience to allow sufficient time for the Team's strategies to deliver results.
The combination of these factors delivers superior risk adjusted returns to our investors.
Stock selection process
The Perennial Fixed Interest "fair value" investment process involves constantly assessing new information to refine our view of the fair value of interest rates or securities. When the market deviates from the Team's assessment, this signals an investment opportunity. There are two principle areas where we seek to enhance returns:
- Active interest rate management
- Credit management.
Within these two board areas, a number of potential value adding strategies exist:
- Duration/Yield curve management
- Sector rotation
- Security rotation.
Through adoption of more than one approach, Perennial Fixed Interest believes that further value can be added, a reduction of risk occurs and investment returns become more consistent over time.
Interest rate decisions
Perennial Fixed Interest forecasts the path of growth and inflation over the medium term. Each week the Team refines this view based on the latest economic and market releases, and, each quarter a strategic review is undertaken of the forecasts.
Credit rate decisions
Perennial Fixed Interest believes that all securities must exhibit high quality, through the low probability of default and a deep secondary market. The Team's focus is on investment grade credit quality.
The final portfolios are constructed according to a strict risk management and compliance regime. The main driver of Perennial Fixed Interest's portfolio construction process is the Team's desire to deliver a portfolio of quality fixed income and cash securities that will deliver superior risk adjusted returns to our investors.