In a letter sent to InvestorDaily, Laminar chief executive Chris Black questioned Morningstar senior research analyst Kathryn Young’s assessment that investors should be cautious of some of the fixed income strategies to recently enter the market.
While Mr Black agreed investors should be careful of fixed income investments that are high risk, he said Australians are “extremely underweight fixed income credit and should be looking to increase their allocation to more conservative asset classes, especially those in or approaching retirement”.
“A point that is often lost in these discussions is that even the higher risk credit funds can be significantly less risky than low equity funds,” said Mr Black.
He also acknowledged the point raised that some investors do face concentration risk by investing in listed fixed income products such as the CBA Perls but said it is important to note that there are other listed fixed income products that avoid a focus on bank tier 1 credit.
Mr Black also argued that “while there is less choice in Australian credit managers versus equity managers, investors don’t need to look overseas for a credit manager”.
“The domestic credit managers are world class,” he said.
