Dear investors,

When I wrote last year that we were positioning the flexible bond strategy to withstand unforeseen shocks and preserve investors’ capital at a time when markets were partying like it was 1999, poor macroeconomic data and political risk, rather than a global pandemic, were my biggest concerns. The world and our day to day lives have changed unimaginably since then and I would like to thank you for your continued trust and patience.


Fortunately, the strategy entered the crisis last March in a defensive stance which allowed us to ride out the volatility and buy into attractive corporate credit opportunities just before central banks swooped in to support markets. The strategy’s barbell structure – which balances medium-to long-dated US and Australian government bonds as a hedge against short-term risk and long-term deflation, with selective corporate credit in resilient businesses – was the key performance driver. I am pleased to say this meant the flexible bond strategy performed strongly during a highly unpredictable year.


Looking at financial markets one year on, it seems that the more things change, the more some things stay the same.
Markets have gone back to the party and hopes of reflation abound. Behind this optimism are expectations of “animal spirits” and pent-up consumer demand once vaccines enable economies to re-open, spending packages from the likes of newly elected President Biden, and continually supportive policy from central banks.


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