Omega Global Investors Director Mathew McCrum says the unique dynamics of a post-GFC global credit market have created an ‘opportunity rich' environment for Australia's leading superannuation funds and other institutional investors to recalibrate their traditional approach to fixed income asset allocation.

"The good news for the custodians of the nation's retirement savings is that ample opportunity exists in global investment grade credit markets, despite the massive corporate de-leveraging since the peak of the 2008/09 credit crisis. While we encourage caution and a selective approach, there remains a golden opportunity for investors to take advantage of improving credit spreads and default risks priced in at record highs.

"Investors have not yet ‘missed the boat' on the credit rally," McCrum said.

Omega Global Investors believes global credit has an important function in robust fixed interest portfolio construction as it provides a higher running yield - over the long-term - than government bonds.

However, new rules apply. Omega says its firm pre-conditions for this particular asset class include a back to basics approach: choosing investment grade bonds issued by companies with a financially healthy footprint (profitable, low debt and strong balance sheet) which have a high probability of paying back debt as bonds mature. 

"We apply further tests - what is the overall market return, are we highly diversified, and is the portfolio invested to control downside risk while fully supporting the upside returns?" McCrum said.

"We have seen recent evidence where traditional fixed income approaches have let investors down. Our firm view is that a quantitative approach, designed to control downside risk and expand beta opportunities delivers a more reliable result than either a fundamental approach or indexing, "McCrum said.

Omega Global Investors takes a ‘benchmark unconstrained' approach to managing global credit. This means bringing together new tools and measures, sourcing ‘better beta' with a strong focus on managing downside risk.

"Our recently published White Paper* outlines the case for this approach where we seek to deliver the very best reward for risk outcome to our clients," McCrum said.

ENDS

*White Paper

In response to demand by institutional investors, Omega Global Investors has developed a White Paper to articulate is unique approach to fixed income investment. The paper outlines the Omega Global Investors ethos of ‘beginning with the end in mind'.

Called "No Fixed Idea - How defensive investing is being re-defined" the White Paper is available by contacting Omega Global Investors at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Media

For further information, contact:

Jane Bryant, BlueChip Communication

T: 02 9018 8600

M: 0450 929 103

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