Global fixed income, Payden & Rygel awarded Rest mandate

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MEDIA RELEASE: Global fixed income manager, Payden & Rygel, has secured a mandate from Rest, with its Payden Absolute Return Investment (PARI) strategy selected to form part of the superannuation fund’s overall portfolio. 

The PARI strategy is represented by GSFM in the Australian and New Zealand markets.

Charles Levinge, GSFM’s Head of Institutional Business, said the mandate will see the PARI strategy sit within Rest’s absolute return asset class.

“The key focus of the PARI strategy is on downside risk protection – with low correlation to equities, bonds and mainstream credit – and an overarching investment philosophy to preserve capital. It is a good fit with Rest’s portfolio. We are looking forward to partnering with Rest to deliver the best investment outcomes for its members” Mr Levinge said.

“In addition to preserving capital, the PARI investment approach aims to limit volatility and outperform the Benchmark over time using a multi-sector, absolute return fixed income approach,” he said. 

Over each rolling three-year period, the portfolio aims to outperform the Bloomberg AusBond Bank Bill Index by two-to-three per cent gross per annum. 

“The central pillar of the strategy is income generated from a highly diversified and rigorously vetted portfolio of global bonds. This stream of income provides the foundation from which the team adds shorter-term tactical views. 

“Risk management is also key to the strategy’s investment philosophy. It relies heavily on the team of analysts and strategists to thoroughly understand the entities in which they invest and determine sectors that provide the most risk-adjusted value opportunities,” said Mr Levinge.

In order to achieve its objectives, the PARI strategy focuses on the concept of smart yield. Smart yield seeks to capture income from front-end maturity fixed income, with an emphasis on the steepest portions of global yield curves by investing in quality names that have a high probability of ultimate pay-off.

“GSFM has an eight-year relationship with Payden & Rygel who manage over $2.8bn in Absolute Return and Global Corporate portfolios on behalf of Australian institutional and retail clients,” Mr Levinge said.

Payden & Rygel originated in Los Angeles and is an independent global investment manager. It was founded in 1983 and is privately owned by 30 senior executives. It currently has $175 billion in funds under management, $17 billion of which is invested in the PARI strategy.

Rest is an industry superannuation fund supporting Australian retail workers, and currently has around two million members with $57 billion in funds under management.