A defensive and
flexible bond strategy
Macquarie Diversified Fixed Interest Fund
A comprehensive bond solution which invests in a wide range of government
and corporate bonds.
Potential diversification
against equity market risk
Defensive, capital
preservation focus
Potential for regular
income stream
1. Potential diversification
against equity market risk
2. Defensive bond exposure with
a focus on capital preservation
Investing in the Fund can help offset the risk of investing in
equities, providing valuable diversification benefits during equity
market downturns. The chart below shows the performance of
bonds and equities during years in which equities provided
a negative return. In every equity market downturn in the
last 20 years, bonds have outperformed equities.
The Fund provides exposure to an actively managed diversified
portfolio of government and corporate bonds. Our philosophical
belief when investing is to preserve investors’ capital. Our
experienced investment professionals constantly monitor the
performance of bond issuers to assess their ability to make
their interest payments and return the initial capital invested.
Performance of bonds and equities over 20 years
The core of the portfolio invests in highly liquid government
bonds and high quality corporate bonds (investment grade
credit). We take an opportunistic approach when investing in
higher risk fixed income assets such as high yield bonds and
emerging market debt. We will only invest in these sectors,
within the ranges below, when our investment process
indicates that they are expected to outperform government
bonds and investment grade credit.
50%
Bonds
40%
Australian equities
30%
Bonds vs Equities
20%
10%
0%
-10%
Asset allocation range for the Fund
-20%
-30%
-40%
Range
1995
2003
2008
2009
2012
Source: Bonds – Bloomberg Ausbond Treasury Index; Australian equities – ASX 200
from 1993 – 2013. Periods selected represent calendar years where bond performance
and equities performance offset. Past performance is not an indicator of future
performance. Bloomberg Finance L.P. and its affiliates (collectively, ‘Bloomberg’)
are not affiliated with Macquarie Investment Management Australia Limited and
do not approve, endorse, review, or recommend the Fund. Bloomberg and the
Bloomberg AusBond Index referred to in this document are trademarks or service
marks of Bloomberg and have been licensed to Macquarie Investment Management
Australia Limited. Bloomberg does not guarantee the timeliness, accurateness, or
completeness of any data or information relating to the Bloomberg AusBond Index
referred to in this document.
0% – 100%
0% – 70%
0% – 20%
0% – 20%
0% – 100%
Investment
Grade
credit
High yield
Emerging
market debt
0% – 20%
Credit
opportunities^
^ Includes other credit related securities which we believe provide attractive value.
macquarie.com
A defensive and flexible bond strategy
Macquarie Diversified Fixed Interest Fund
3. Potential for regular income stream
The main attraction of investing in bonds are that they pay regular interest and principal back on maturity. Put simply, a fixed interest
bond is analogous to a loan. Investors provide capital to the borrower and receive a regular income stream, known as the coupon,
and the initial capital back at an agreed maturity date.
The types of bonds that the Fund can invest in include those
issued by various government entities both in Australia and
overseas (government bonds) as well as bonds issued by
a range of Australian and global companies (corporate bonds).
As corporate bonds are said to have more risk than
government bonds, they generally offer a higher interest rate
to attract investors.
This higher ‘coupon’ results in a higher level of income.
The Fund distributes income on a quarterly basis.
Example of investing in a government bond
The Australian government decides to issue a $750
million, 5% interest-bearing bond for a five-year term. By
investing in this bond, the Fund is entitled to an interest
payment of 5% per annum and at the end of the five-year
term, the Australian government is required to repay the
original $750 million to the Fund.
About Macquarie Investment Management
Macquarie Investment Management has been managing cash and fixed income portfolios since 1970. Over 100 investment
professionals manage $235 billion* in fixed income and currency assets globally.
*30 June 2016
Risks
All investments carry risk. Different investments carry different levels of risk, depending on the investment strategy and the
underlying investments. Generally, the higher the potential return of an investment, the greater the risk. The risks of investing in this
Fund include:
Investment risk: The Fund seeks to generate higher income
returns than traditional cash investments. The risk of an
investment in the Fund is higher than an investment in a
typical bank account or term deposit. Amounts distributed
to unitholders may fluctuate, as may the Fund’s unit price.
The unit price may vary by material amounts, even over
short periods of time, including during the period between a
redemption request being made and the time the redemption
unit price is calculated.
Manager risk: There is no guarantee that the Fund will achieve
its performance objectives, produce returns that are positive, or
compare favourably against its peers. The Investment Manager
may change its investment strategies and internal trading
guidelines over time, and there is no guarantee that such
changes would produce favourable outcomes.
Income securities risk: The Fund may have exposure to a
range of income securities, including high yield, emerging
markets and structured securities. The value of these securities
may fall, for example due to market volatility, interest rate
movements, perceptions of credit quality, supply and demand
pressures, market sentiment, or issuer default. These risks may
be greater for securities offering higher returns, for example
high yield or emerging market securities. Income security risk
may cause unit price volatility and/or financial loss to the Fund.
More information on the risks of investing in the Fund is contained in the product disclosure statement, which should be
considered before deciding to invest in the Fund.
For more information speak to your financial adviser, call us on 1800 814 523,
email [email protected] or visit macquarie.com/personal/managed-funds
Important information
This information has been prepared by Macquarie Investment Management Australia Limited (ABN 55 092 552 611 AFSL 238321) the issuer and responsible entity of the Fund referred
to above. This is general information only and does not take account of investment objectives, financial situation or needs of any person. It should not be relied upon in determining whether
to invest in the Fund. In deciding whether to acquire or continue to hold an investment in the Fund, an investor should consider the Fund’s product disclosure statement. The product
disclosure statement is available on our website at macquarie.com.au/pds or by contacting us on 1800 814 523.
Past performance information is for illustrative purposes only and is not a reliable indicator of future performance.
Other than Macquarie Bank Limited (MBL), none of the entities noted in this document are authorised deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth
of Australia). The obligations of these entities do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of
these entities, unless noted otherwise.
160663 | 10/2016
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