Background
FIIG offers a wide range of services to help clients and investors make informed investment decisions and provide insights into companies and the broader market. One of these services is our in-house Credit Research team, a major differentiating factor
compared to other fixed income businesses in Australia.
In this article, we will delve into the functions and role of the Research team and take an opportunity to get to know the team.
Research function
While the media and other financial firms will provide news reports and updates on some of the largest issuers, they can sometimes be quite basic without an in-depth explanation into the causes of the results and impacts on the company’s future.
Additionally, many bonds are also issued by private companies for which the information flow is a lot more sporadic. This is where the Research team steps in.
Simplistically, the team analyses most of the credits (i.e. the companies behind the bonds, both public and private, large and small) offered to FIIG clients. There are multiple ways in which the team reports these updates, including full-and half-year
results, the monthly Company Tracker, factsheets, new issue reports, sector updates, educational pieces, strategy articles and Smart Income. The team is also responsible (amongst others) for adding new bonds to FIIG’s offering. And we are of
course always available to answer any questions that you may have, small or otherwise.
A question often asked by clients is the process that the team undertakes when recommending bonds. It is one which involves a number of considerations and can be thought of as a hamburger, made up of different layers which together completes the process,
as per the below diagram.
The top four are the primary considerations, and once we are comfortable with the issuer and income impact on clients, will undertake more in-depth analysis. At the end of the day, the main determination is whether the company can pay their debts as they
fall due. And while you only get to see those that made it through this filtering process, you shouldn’t assume that every opportunity makes it to the end. Although bonds, as an asset class, comprise many different instruments (some with very
high risks, and corresponding high returns), our analysis and approach incorporate our view of what our client base ultimately wants, i.e. capital preservation and attractive predictable income.
Meet the team
FIIG’s Research team is geographically spread between Brisbane, Perth, and Sydney – covering most local time zones.
Thomas Jacquot and Garreth Innes head up the team as Head and Deputy Head of Research, respectively, and bring with them many years of experience with a background in credit analysis.
Thomas started his career working for a waste collection and street cleaning company in the UK, but worked at S&P Global Ratings for about seven years, with his final position as Head of APAC Infrastructure ratings prior to joining FIIG. Mention a
key piece of infrastructure in Australia and he’s bound to have worked on the funding/rating in some capacity.
Garreth has previously managed numerous domestic and global bond portfolios for institutional clients, and also worked as a multi-asset portfolio manager, making investment decisions on behalf of investors and tracking benchmarks. Garreth has a passion
for fixed income as he describes the asset class as the ‘beating heart of global financial markets’. As he further explains “We’ve seen this by a few, sudden shutdowns of credit markets over the years, which have brought the
system to its knees”.
Providing credit updates and sitting in on issuer calls among other things, Tom Sharp is a credit analyst on the team, keeping FIIG clients up to date with results and other key information. It’s this interest in how company and economic news drives
a market response that he most enjoys. “I also like being able to explain complex concepts and reasons for such movements to clients”, he expands.
Jessica Rusit is the investment strategy arm of the team, having worked at FIIG for over 10-years, and spent six of those years on the execution/facilitation desk. Jessica contributes to the several publications and tools that FIIG clients can access
to better position their fixed income portfolios. She recently released a podcast that discusses the benefits of direct bond ownership.
It would be amiss to not ask such minds on where they see opportunities in the fixed income market for the new Financial Year. All are mostly in agreeance that they prefer fixed over floating, with Tom adding ‘we should be coming towards the end
of the hiking cycle’. Thomas preferences his response that it depends on an investor’s objectives and risk appetite but sees a very flat yield curve in the short term and a compelling case to remain in shorter-dated exposures for lack
of term premium (where there is limited extra return for a longer tenor). From a valuation standpoint, Garreth believes high-quality investment grade bonds look cheap as we head into a slowdown at some point. Jessica adds that inflation linked bonds
currently offer higher returns while also protecting portfolios against inflationary pressures- she views them as a core-holding.
Outside of FIIG, the team has a diverse range of interests and hobbies, with Thomas enjoying cooking, although admits he has no talent other than ‘sticking to the recipe’. Garreth has his grandmother to thank for his love of the long-running Days of Our Lives TV
soapie, while Tom avidly follows Rugby Union and is tipping the Wallabies to at least make the semi-finals at the upcoming Rugby World Cup in France. Most of Jessica’s time is taken up with her puppy Labrador, which is quite the rascal.