VicSuper awards a new $100M mandate to Payden & Rygel

VicSuper has awarded a new $100 million mandate to global fixed interest manager Payden & Rygel (P&R), to manage an absolute return investment portfolio. The mandate will form part of VicSuper’s alternatives strategy. This is the second mandate VicSuper has awarded to P&R in the past three years.

Oscar Fabian, VicSuper’s Chief Investment Officer said, “we are very pleased to widen our relationship with P&R. This is an innovative approach with the portfolio comprising the best ideas of each of P&R’s underlying specialist sector teams. The strategy is designed to achieve a positive return with a low sensitivity to interest rates.”

“The debt portion of our fund continues to perform well. We believe however, that the current economic conditions will inevitably lead the Federal Reserve to raise interest rates. The introduction of this new mandate with its shorter duration ensures that our fund is well positioned when they do.” Mr Fabian concluded.

The P&R absolute return strategy aims to generate gross returns of 2.5% above the 3 month AFMA Bank Bill Swap Rate over the medium term. This is targeted through a broad range of global fixed interest investments and active management of portfolio duration.

Payden & Rygel received an initial mandate of $110 million from VicSuper in 2012 to manage a portfolio of diversified global fixed interest assets covering a mix of investment grade bonds, high yield and emerging market debt. This portfolio has grown to in excess of $300 million today.

Andrew McKinnon, CEO of Grant Samuel Funds Management who formed a distribution relationship with Payden & Rygel in 2011, said: “This strategy focuses on absolute return rather than relative return. It relies on active management by an experienced fixed interest investment team to take advantage of changing market environments and value opportunities.”