Tuesday 08 March 2022 by Jessica Rusit Opportunities-in-fixed-income-with-our-female-fiig-experts Trade opportunities

Opportunities in fixed income with our (female) FIIG experts

With International Women’s Day 2022 taking place this week, we’re shining a light on some of the brilliant females we have at FIIG. I asked two of my dedicated and insightful female colleagues about the opportunities they see in the fixed income space, and what International Women’s Day means to them.

At FIIG, we’re lucky to have both Natalie Wilding and Ellen Allardice as Relationship Managers on our Private Client Solutions team. On any given day you’ll find them listening to clients, optimising portfolios, and seeking out trade opportunities to improve client returns, among other things. Not to mention these ladies are busy mothers outside of work too!

Natalie Wilding

Natalie works in our Sydney office and has over 15-years’ experience in fixed income. As such, she’s a knowledgeable person to speak with on the asset class and how’s she’s positioning client portfolios for the year ahead.


With markets currently in a state of heightened uncertainty, Natalie believes times like this demonstrate how bonds can better diversify portfolios compared to other asset classes, providing a level of both capital and income protection. “Another benefit to bonds is that they don’t have the large entry costs of property and generally don’t have the large swings in capital price of equities,” she adds.

Inflation linked bonds can also provide a level of inflation protection to portfolios, which Natalie says is a common concern she hears from her clients. “In the current environment, with the potential for headline inflation to have temporary spikes, clients are concerned they have too much allocated to cash or term deposits, eroding their wealth,” she explains. Where a deposit rate is below the quarterly inflation rate, in ‘real’ inflation-adjusted terms, savers are losing purchasing power.

Inflation linked bonds, such as Indexed Annuity Bonds (IABs), readjust their quarterly coupon payments in-line with inflation prints, and thus increase when inflation moves higher. Australia’s 4Q 2021 trimmed mean inflation data overshot the Reserve Bank of Australia’s (RBA) forecast, at an annual rate of 2.60%. This sits at the mid-point of the RBA’s target range.

I ask Natalie what she believes is a possible risk for fixed income portfolios over the year ahead, which she quips while being a risk, she also sees it as an opportunity. “With the potential for yields to push higher (as yields move higher, capital prices move lower), this will also bring about good buying opportunities in quality investment grade credits,” she says.

Natalie shares with me her top bond picks at present that she’s been adding to client portfolios, and why. A strategy she’s been using to improve returns for portfolios, while only incrementally adding risk, is to move lower down the capital structure for quality issuers. This means investing in Corporate Hybrids and Tier 1 Capital instruments. She favours the Macquarie 2027c and Westpac 2027c instruments, which are both USD-denominated bonds.

With growing noise around interest rate hikes, clients are keen to add more floating rate note exposures, although they are mindful the Bank Bill Swap Rate (BBSW) will remain relatively low until further into the RBA rate hiking cycle (floating rate notes pay a coupon made up of a margin over the BBSW plus the benchmark rate). As such, she recommends they add higher margin exposures, that will still provide a good income stream in the interim. She favours the Pepper Money subordinated note that pays a coupon of 3M BBSW plus 6.00%.

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The International Women’s Day theme for 2022 is Break the Bias, which Natalie thoughtfully says is about removing the prejudice to favour one type of person or group and valuing the differences we all have. It’s a response that applies to any person, regardless of gender, and how relevant considering the discussions of late in our own Parliament.

Ellen Allardice

Ellen rounds out our Perth office, having joined the team just under two years ago. Prior to moving across to FIIG, she worked for over ten years in investment management. She offers her insights into risks for the year ahead, and how’s she’s been constructing her clients’ portfolios.


She summarises the benefits bonds offer in three simple words: security, certainty, predictability. “The fact that bonds offer a regular, stable income stream allows investors to better forward plan their spending needs and cover fixed costs,” Ellen explains.

With central banks in the final stages of unwinding their ultra-loose monetary policies, the old investing adage ‘past performance is not an indication of future performance’ rings true to Ellen. She explains that some investors may be caught up in the historical performance of equities, which she doesn’t believe can continue with markets starting to price in higher inflation and interest rates. “Investors need to reassess their portfolios and ensure they are well positioned for how this could impact them going forward,” she explains.

Where there had been noise around yields moving higher, recent developments have seen an increased demand for safer investments, with the yields on longer dated government bonds tightening. The volatility index (the VIX), a measure of the US stock market’s expectation of volatility, recently spiked to 38 (at normal times, it will read under 20).

With this, Ellen has seen an increase in the number of enquiries she’s had into bonds, although trust, she says, is one of the biggest concerns investors have. She explains many investors know very little about investing and are largely influenced by the media. “I feel the most important part of my job is to instil trust and develop a relationship with my clients so that they feel comfortable to ask questions, and also feel confident that my suggestions regarding their portfolio are always made with their best interest in mind,” she says.

With volatility set to continue, Ellen favours diversification along with active management when it comes to portfolio construction. She believes that actively managing investments ensures a portfolio is appropriately placed in a constantly changing environment and in the best possible position to achieve investment objectives through market cycles.

She prefers a balanced approach, with the inclusion of investment grade credits, along with higher yielding bonds to boost portfolio returns. Her top bond picks include the Ampol 2026c floating rate note, which offers investors an investment grade exposure in a household name and Sydney Airport 2030, which is an inflation linked bond, providing a hedge against inflation.

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When Ellen considers the theme for International Women’s Day 2022 of Break the Bias, she says she’d like to see a world where any person can choose the life they want and the role they wish to play. “Where opportunities are made available for whoever, man or woman, chooses to embrace them,” she says. Being a mother of two sons, Ellen is grateful for the choice she has to be a mum and have a career also.