Morningstar rates AMP Capital's fixed interest strategy
Morningstar has given AMP Capital's New Zealand fixed interest strategy a “recommended” rating and says it is a sound option for investors seeking a defensive local element for their portfolio.
Wednesday, March 18th 2009, 7:10AM
The research house describes it as being a traditional approach to fixed interest investing, and one which is more conservative than many peers.
AMP Capital’s head of fixed interest Grant Hassell has been running the strategy almost since its inception in 1995.
The fixed interest team specialise in macroeconomic markets, which serves this strategy well given the preference for adding value using interest rate management rather than taking credit bets.
“The strategy invests in government bonds (including local government), high-grade corporate debt, and interest rate swaps. AMP Capital has a conservative style, and attempts to diversify risk where possible. True, interest rate risk is a factor here, and this careful approach has lagged peers at times, such as during the middle of this decade. But therein lies the appeal.”
Morningstar says that during more turbulent times in credit markets AMP Capital have delivered “handsomely” with 2008 being an example.
Morningstar also notes it is available in a Portfolio Investment Entity (PIE) structure, it has a low investment minimum and low ongoing fee of 0.55%. This makes it one of the cheapest bond plays in the market.
The research house says on a medium-term outlook, AMP Capital's New Zealand fixed interest strategy could form a core element in an income-based portfolio.
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