Anthony Kirkham, Legg Mason/Western Asset Management; Andrew Yap, Zenith. Photo: Matt Fatches
Category: Australian fixed interest
Winner: Legg Mason/Western Asset Management Company
Analyst: Andrew Yap
Sector overview:
Active returns generated across the Australian fixed interest sector have been subdued over the past 12 months, with the peer group delivering a wide range of investment outcomes. Active managers have found it difficult to generate consistent outperformance, in part owing to active rate strategies which have commonly detracted value at a time where the RBA has continued on its easing bias. Credit spreads have also remained volatile, impacted by a reduction in liquidity brought by regulatory change and demand/supply imbalances. Notwithstanding these headwinds, Zenith believes the case for active management in the sector remains strong, particularly for those participants that are able to demonstrate greater breadth and balance in active strategies.
Zenith says…
Zenith views Western Asset Management (WAM) as a standout manager within the domestic fixed interest market. Our conviction in WAM’s investment capability has continued to increase in recent times, underpinned by our strong view of the investment team under the leadership of Anthony Kirkham, head of investment management. Through the team’s adherence to an investment style best described as “value-driven sector rotation”, WAM has also demonstrated an ability to consistently deliver on stated investment objectives.
Interview:
Anthony Kirkham
Head of investment management
Legg Mason/Western Asset Management
Western Asset is a large global fixed income firm and one of the largest affiliates of Legg Mason. We’re a very experienced, stable team with an average of more than 20 years’ experience in the market in the investment team, and certainly that experience helps. There’s six in the team in Australia, but we’re part of a bigger global firm that has more than $US460 billion (A$600 billion) under management. Within fixed income, because it is the sector that’s constantly trying to grab for bits of value, it’s our overall process that continues to give us that outperformance over a long time. It’s the way we use our global resources to bring together the decision-making process and come up with value-adding trades, consistently. A number of areas have worked, in terms of sector rotation and recognising a number of the challenges. Particularly with QE pushing capital globally looking for yield, having an understanding of those flows and working the portfolio to add value with that has certainly been important. And using credit research skills globally, because the Australian market is made up of a lot of what we call ‘kangaroo issuers’, and using that knowledge and that investment expertise to make the right decisions within credit has consistently added value for us as well. For us, it’s about sticking to our fundamentals and continuing to position ourselves for the long term.