Global sovereign

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Insight has a long and successful history of managing global government debt, demonstrated by our long-standing performance track record. We have the flexibility to work with our clients to implement a global sovereign strategy that meets their specific needs and risk requirements.

Our global sovereign strategy pursues returns ahead of the wider market, and has the flexibility to invest global government bonds and supranationals across government bonds through duration and yield curve positioning, as well as cross-country relative-value trades, using derivatives to help manage and target risk exposures with precision.

We follow a rigorous, disciplined and proven investment process that includes in-depth analysis within a strong risk-controlled framework. The aim is to add consistent value in all market conditions using both conventional and index-linked bonds across global fixed income markets.

As a committed responsible investor since we launched in 2002, we have integrated environmental, social and governance (ESG) considerations into our decision-making processes. Insight was a founding signatory to the Principles for Responsible Investment in 2006 and we have continued to develop our approach. In sovereign debt investment, a notable innovation has been our proprietary model for assessing individual countries’ sustainability risks. For more information, please visit our responsible investment microsite.

Benefits

  • Enhanced yield through diversified sources of returns: Aims to outperform the global government bond market through active management focused on duration and yield curve management, as well as security selection and cross-country relative-value trades
  • Established track record: Our expertise in actively managing portfolios in government bond markets is demonstrated through our long-term track record
  • Precision: The portfolio managers can target specific duration and risk characteristics through the use of derivatives, allowing for long and short exposure and a precise risk/return profile
  • Team structure: The team is stable and highly experienced, and includes specialists who invest across key fixed income asset classes
  • Process: We believe the strategy’s investment process is robust and repeatable, based on our in-house macro research and credit analysis functions. Our proprietary 'units of risk' model provides us with a consistent way to quantify and scale risk, enabling us to optimise the risk/return ratio in our portfolios.

Performance

Global sovereign strategy

Global sovereign strategy

In numbers

  • 1998 Insight launched its global sovereign strategy
  • 118 Fixed income investment professionals globally
  • A$276bn in fixed income assets managed globally

As at 31 March 2020. Assets under management (AUM) are represented by the value of cash securities and other economic exposure managed for clients. 

Past performance is not indicative of future results. Investment in any strategy involves a risk of loss which may partly be due to exchange rate fluctuations.

The performance results shown, whether net or gross of investment management fees, reflect the reinvestment of dividends and/or income and other earnings. Any gross of fees performance does not include fees and charges and these can have a material detrimental effect on the performance of an investment.

Any target performance aims are not a guarantee, may not be achieved and a capital loss may occur. Strategies which have a higher performance aim generally take more risk to achieve this and so have a greater potential for the returns to be significantly different than expected.

Portfolio holdings are subject to change, for information only and are not investment recommendations.

Associated investment risks

Fixed income/Currency

Where the portfolio holds over 35% of its net asset value in securities of one governmental issuer, the value of the portfolio may be profoundly affected if one or more of these issuers fails to meet its obligations or suffers a ratings downgrade.

A credit default swap (CDS) provides a measure of protection against defaults of debt issuers but there is no assurance their use will be effective or will have the desired result.

The issuer of a debt security may not pay income or repay capital to the bondholder when due.

Currency hedging techniques aim to eliminate the effects of changes in the exchange rate between the currency of the underlying investments and the base currency (i.e. the reporting currency) of the portfolio. These techniques may not eliminate all the currency risk.

Derivatives may be used to generate returns as well as to reduce costs and/or the overall risk of the portfolio. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment.

Investments in emerging markets can be less liquid and riskier than more developed markets and difficulties in accounting, dealing, settlement and custody may arise.

Investments in bonds are affected by interest rates and inflation trends which may affect the value of the portfolio.

Where high yield instruments are held, their low credit rating indicates a greater risk of default, which would affect the value of the portfolio.

The investment manager may invest in instruments which can be difficult to sell when markets are stressed.

Where leverage is used as part of the management of the portfolio through the use of swaps and other derivative instruments, this can increase the overall volatility. While leverage presents opportunities for increasing total returns, it has the effect of potentially increasing losses as well. Any event that adversely affects the value of an investment would be magnified to the extent that leverage is employed by the portfolio. Any losses would therefore be greater than if leverage were not employed.