National Australia Bank-owned MLC Investment Management has awarded Peridiem Global Investors a series of mandates for its Horizon 1 and MLC Diversified Debt Fund.
"We've increased the allocation to global absolute return bonds in all our debt strategies, except MLC Horizon 1 as it already has a high exposure," MLC Investment Management fixed income portfolio manager Stuart Piper said.
"The increased allocation was funded by de-allocating from our existing global absolute return manager, Deutsche [Asset Manangement], and from one of our traditional bond sectors, global non-government bonds."
Franklin Templeton, Oaktree and WR Huff suffered smaller de-allocations in favour of Peridiem in the global multi-sector bonds and global high-yield bond sectors.
The appointment of Peridiem comes after boutique backer nabInvest took a non-controlling stake in the firm in August 2011.
Piper said this deal allowed MLC to get good terms for its mandate.
"We worked with nabInvest in identifying this team and creating this investment opportunity," he said.
"This has resulted in MLC seeding Peridiem on attractive commercial terms for our clients, while nabInvest has taken a minority stake in the new business."
The appointment of Peridiem fitted with its shift away from traditional bond managers, he said.
"Investing in bonds in a low interest rate environment poses challenges for traditional bond managers. While active bond managers can continue to generate returns above market benchmarks, absolute returns can be quite low," he said.
"That's why we've focused our research, in recent years, on diversifying returns away from traditional bonds and into sectors such as enhanced cash, global absolute return bonds, global multi-sector bonds, inflation-linked bonds and non-investment-grade bonds."
