an experienced investor with more than two decades of industry experience and around nine years at UBS. Grow steers the portfolio from its baseline allocation of 50/50 exposure to global and local fixed-interest markets.
The group philosophy is to find the best return available for a given level of risk, no matter where a bond is issued. Grow expresses thoughtful ideas via an allocation to several internal UBS funds, mostly in the International Bond Fund and the locally domiciled Australian Bond Fund. Further adjustments through overlays shape the portfolio when well-reasoned opportunities arise
Bonds and credit securities can be sourced locally and globally
The fund invests in a number of UBS pooled funds, which can include Australian Bond, Global Credit, International Bond, Asset Backed Securities, Asian Bonds, and cash. The fund uses the split benchmark for portfolio positioning, but the final portfolio has differed meaningfully in the past. This also means that the portfolio’s composition can move around quickly as the team’s view changes and markets move.
As at November 2019, there was around 40% allocated to the international strategy and 44% to the Australian strategy. The fund will also take significant duration and credit bets. During 2014, the fund’s duration position got as large as 1.8 years shorter than the benchmark in 2014 and contributed meaningfully to tracking error. While it was neutralised in April 2015, as at October 2019, it stood around 0.5-year longer than the benchmark.
The portfolio is predominantly made up of investment-grade exposure (typically 60% is in AA and above), but high-yield investments have featured (limited to 30% of the portfolio). China policy banks have been a new exposure since 2019 as they present a relatively attractive yield. As at June 2020, the team managed around AUD 2.6 billion in this strategy.
A balanced and experienced team
The UBS Australian Fixed Income team has been led by head of fixed-income Australia Anne Anderson and senior portfolio manager Tim van Klaveren. They have been with the business for more than 20 years and make for aformidable partnership. However, in October 2020 Anderson announced her retirement from UBS to seek advisory work in a part-time capacity. This means van Klaveren will take leadership of the Australian portfolio management team, and the responsibilities of senior portfolio manager Jeff Grow will increase.
Both are highly experienced with 31 and 26 years’ in the industry. Duties have typically been separated; van Klavaren is chair of the global IG subcommittee and is primarily focused on sector and credit allocation, while Grow is heavily involved in rates and currency positioning. Two additional portfolio managers assist here. On the credit side, Ben Squire leads the research efforts in APAC and has local analyst support. The Australian team has continual access to its global colleagues via the global macro committee, which produces key research for this strategy.
(Source: Fact Set)
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