Process & Capabilities

Process

Investment Valuations consistently applied in portfolio decisions with a strong focus on managing risk.

Investment Value is at the core of Colchester’s investment process. It is the synthesis of “Real Value” and “Financial Stability” assessed across countries, currencies, sectors, duration and maturity. Real Value is captured by our estimates of the expected real yield – the real return after subtracting the impact of expected inflation from nominal yields. This is underpinned by a robust inflation forecasting framework based on time proven, quantitatively oriented methodologies and the judgment of our experienced investment team. The determinants of Financial Stability – economic deficits and surpluses, monetary conditions and policy objectives – are appraised via a combination of rigorous analytical methods and experienced judgment. This methodology provides an integrated framework within which all fixed income assets we invest in can be appraised on a consistent basis.

Currency management primarily serves to diversify portfolio risk and provide additional potential value add. We believe that from time to time, excellent return-enhancing currency opportunities can be identified by looking for extremes in the value of real exchange rates. Therefore, real exchange rates are the main focus of the firm’s currency research efforts, supplemented by current account and fiscal balance analysis.

Our Investment Management Committee approves inflation forecasts, the bond and currency financial stability scores and the resulting real yield and real exchange valuations. We utilise an optimisation process which is used to produce optimal portfolios that have the highest real bond yield available and exposure to the most attractive currencies, within the overall risk constraints of the portfolio.


Capabilities

Our central investment strategy is applied consistently across each mandate, to multiple benchmarks and different base currencies, whilst offering alternative currency hedging strategies.

Clients have the option of tailoring a portfolio to their needs; whether it be within our flagship global sovereign bond capability or another subset of the market such as local emerging markets, inflation linked bonds or our alpha program. Colchester offers the ability to manage to a range of benchmarks, and various currency management and risk parameters.

Investment management services are offered to Australian clients on a separate account basis for mandates over A$75 million. Wholesale funds are offered to investors via platform or to wholesale clients for a minimum investment of A$1 million.

Find out how to invest

Request a copy of our ‘Investment Process’ document.

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