Duration supports diversification as it typically behaves differently to growth assets such as equities, particularly during periods of economic stress. When growth slows or markets decline, interest rates often fall, which can support returns from longer duration assets. This helps offset equity losses, reduce overall portfolio volatility, and provide an additional source of return through both income and capital appreciation.
With yields now more attractive than in recent years, duration offers improved income while continuing to play an important stabilising role within portfolios. In addition, credit spreads, being the additional compensation received over government bonds, remain tight in both absolute terms and relative to history. This reduces the margin for error in credit and enhances the relative attractiveness of duration at this point in the cycle.
To implement these changes, we reduced exposure to enhanced cash and short term credit by trimming holdings in Daintree Core Income, Pendal Short Term Income Securities, iShares Enhanced Cash, Yarra Enhanced Income, Western Asset Enhanced Income and Realm Short Term Income. The proceeds were reallocated to increase exposure to Western Asset Australian Bond and to introduce Janus Henderson Australian Fixed Interest, PIMCO Global Bond and Bentham Global Income, providing greater exposure to both Australian and global duration and strengthening overall portfolio resilience.
The PIMCO Global Bond Fund is an actively managed global fixed income fund designed to provide investors with diversified exposure to a broad range of high-quality bonds from around the world, with the aim of delivering attractive total returns with relatively low volatility and preserving capital over the medium to long term. Managed by PIMCO Australia (drawing on PIMCO’s global fixed income expertise and resources), the fund invests in a wide opportunity set that includes government, corporate, mortgage and other fixed interest securities across major world currencies and may include non-investment grade and emerging market debt where attractive.
The investment philosophy centres on active, research-driven bond management, combining top-down macroeconomic analysis with bottom-up security selection and risk-focused portfolio construction to identify value across global fixed income markets. Its process emphasises disciplined duration and credit analysis, relative value assessment, sector allocation and individual security selection, while adjusting exposures dynamically in response to evolving economic conditions and market opportunities.
The Bentham Global Income Fund aims to generate stable investment income with potential for capital growth over the medium to long term by providing diversified exposure to domestic and global credit markets. The fund actively manages allocations across various credit sectors, including global high yield bonds, syndicated loans, and investment-grade corporate credit, seeking to enhance returns while effectively managing risk.
Established in 2003, the fund is managed by Bentham Asset Management, a specialist fixed interest and credit investment manager based in Sydney, Australia. The firm's leadership includes Chief Investment Officer and Principal Richard Quin, who, along with his team, previously worked as part of the Credit Investment Group at Credit Suisse Asset Management. This experienced team brings a strong track record in managing global diversified fixed interest portfolios. Bentham Asset Management emphasizes a strong credit culture and a systematic investment process, focusing on capital preservation and protection against downside risk. By leveraging a global perspective, the firm seeks to identify and capitalize on diverse investment opportunities, aiming to deliver higher income than traditional fixed interest and equity markets while maintaining a diversified and actively managed portfolio.
The Janus Henderson Australian Fixed Interest Fund aims to deliver stable income and capital preservation through a diversified portfolio of high quality Australian bonds, including government, semi government, and investment grade corporate securities.
Janus Henderson Investors, formed in 2017 from the merger of Janus Capital Group and Henderson Group, brings global investment expertise alongside a well established Australian fixed interest team. Portfolio managers such as Jay Sivapalan combine deep macroeconomic insight with rigorous credit research, supported by a broader team of analysts and risk specialists. Their disciplined process integrates top down views with bottom up security selection, focusing on relative value opportunities and downside protection.
The strategy is driven by a focus on active management, diversification, and disciplined risk management. By combining macroeconomic analysis with detailed issuer research, the team adjusts duration, yield curve positioning, and credit exposure to capture opportunities while preserving capital. This approach supports consistent income generation and resilient performance across varying market conditions.