Benefits of investing in the Payden Global Income Opportunities Fund

Investing in the Fund offers investors a range of benefits including:

• professional management by an experienced fixed interest investment team;
  
• access to a highly diversified portfolio of global fixed income  securities with potential for regular income from its core  investments;
  
• a portfolio that offers diversification benefits to investors;
  
• exposure to a mix of markets, securities and currencies in  which it would otherwise be difficult for an individual investor to invest for a relatively small initial investment;
  
• disciplined risk management process;
  
• aims to distribute quarterly; and
  
• governance of the Fund in accordance with its Constitution and the Corporations Act.
  

Risk level

Medium

Investor suitability

The Fund is designed for experienced investors who are looking for a return that seeks to exceed the benchmark through a diversified portfolio of primarily fixed income investments but who can tolerate fluctuations of income and the risk of capital loss.    

The Payden Global Income Opportunities Fund is designed to generate steady and dependable returns regardless of the market environment and aims to produce a positive rate of return above the Bloomberg AusBond Bank Bill Index.

Fund overview

As an unconstrained investment strategy, the Fund is not beholden to a benchmark. It is designed to be better able to navigate the complexities of the evolving fixed income landscape and changing economic environment than traditional benchmark aware bond funds.

Unconstrained strategies are typically managed to beat a cash or equivalent benchmark, rather than a bond index; this removes constraints around duration and sector positioning. The result? A Fund that has the flexibility to dynamically alter its investment mix to find the best opportunities across securities, duration and geography.

The Fund is managed using the Payden Absolute Return Investing - or PARI - strategy; the process focuses on constructing the portfolio from that combines top-down and bottom-up views, while emphasising income generation in its core positions.

In the current environment, professional investors are contending with falling interest rates in some economies and rising rates in others; falling interest rates may reduce a portfolio's yield, while rising rates may negatively impact fixed income portfolios. This is particularly significant for traditional benchmark aware bond funds, which are exposed to rising rates and are less focused on delivering absolute performance.

Payden's unconstrained approach enables the Fund to invest in the full spectrum of fixed income assets, of both long and short duration, providing a large degree of flexibility - as markets change, Payden can significantly change the portfolio. In other words, Payden can invest anywhere, anytime, to deliver on the Fund's objective.

The Fund at a glance

• Typically holds a low duration bias

• Aims to make quarterly income distributions

• Diversified portfolio with up to 300 holdings

• Managed using Payden's proprietary PARI approach

• Managed by a specialist investment house that is large enough to get access to new issues, but small enough to execute trades nimbly, using cash rather than derivatives

• Robust risk management process ensures that no single theme or risk factor dominates sector allocation or performance.

How we invest your money

The Fund employs the Payden Absolute Return Investing (PARI') strategy. The central anchor to PARI returns is income generated from a diversified portfolio of fixed income securities. The Fund's investments may include but are not limited to the following: global corporate, sovereign and supranational issues; high yield debt; agency issues; emerging markets debt; mortgage-backed and asset-backed securities; convertible bonds; syndicated bank loans; currency; and derivatives to generate return. The Investment Manager adds medium-term thematic views, in which macroeconomic, demographic, geopolitical and other themes are analysed to understand the associated market implications, and uses short-term tactical trading to add incremental value. The Investment Manager may incorporate hedges to mitigate the potential effects of extreme market conditions.

Indicative asset classes and asset allocation ranges*

• Fixed Interest**: 0% - 100%

• Sub investment grade securities: 0% - 50%

• Foreign Exchange Exposure: -20% - 20% 

• Cash***: 0% - 100%

*This will include all types of investments giving exposure to that asset, directly or indirectly It does not preclude investment in other types of assets where the Investment Manager considers it appropriate to do so in the interest of investors.

**This will include securities with fixed and floating interest rates. Some subcategories may have specific allocation limits.

***Including money market instruments, certificates of deposits and short government bills.

The Fund uses derivatives, which may include forwards, futures, options and swaps (including interest rate swaps, total return swaps and credit default swaps), to reduce risk, such as hedging currency exposure or the interest rate risk of a security, and to invest to take advantage of what in Payden's view represent compelling return opportunities.

The base currency and neutral position of the Fund is the Australian dollar (AUD). The Fund will be substantially hedged to this currency unless the Investment Manager expresses a specific market view.