Since Vimal Gor, head of income and fixed interest at BT Investment Management, came to live in Australia he has not experienced a good summer.
“There’s been lots of bad winters as well,” says the former London resident. On his 40th birthday Gor had to change into a dry suit in the office after getting soaked in a Sydney rainstorm.
At BT Gor has sought a downpour of investor interest in his bond funds by characterising the philosophy of his seven-member team as the “most defensive fixed-income manager in Australia”. His team now manages about $13 billion.
“Lots of people have been let down by fixed income in the past,” says Gor. “We want to be boring and safe.”
From the time of his arrival at BT in November 2009 Gor has shrunk the number of the firm’s bond investment units from three to one, fired and hired staff and conducted extensive meetings with many outside the company to find out what individual and institutional investors want.
The investment manager now has three flagship bond products: the BT Wholesale Fixed Interest Fund, which acts as a product to sit alongside equities in a balanced portfolio; the BT Wholesale Monthly Income Plus Fund, for the retiree market and people looking to invest outside term deposits; and an absolute-return fund that is only open to those with at least $100 million to invest.
BT is also creating bond investment products for specific investors.
“We’re not trying to replicate Australia’s largest fund managers by having a product in every market segment,” says Gor. “It’s about having a small number of products and hitting the return targets on those products.”
Australians on average have only 15 per cent of their investments in fixed income, compared to the US and Europe where bonds make up about 30 per cent of an investment portfolio.
Australia’s younger and growing population coupled with the well established “cult of equity,” says Gor, has meant bonds as investments have not been given the attention perhaps they deserve from asset managers.
Over the last decade annual bond returns as measured by the UBS Composite Bond Index has been 6.5 per cent a year, about the same as investments in Australian stocks.
Australia, which has about $1.9 trillion in assets under management, is biased toward investing domestically as fund managers like to be invested in Australian benchmarks, says Gor.
“Over time, as the population ages, interest in bonds will rise,” he says. “We’ve been successful in winning mandates.”
After graduating with a degree in economics and computer science from the University of Salford in Manchester, Gor worked for 15 years as a portfolio manager in London.
Despite the weather, he likes his life in the Sydney suburb of Paddington. A watercolour painting of William Street by Gor’s wife, Alix Fairbairn, is hanging in the Art Gallery of New South Wales where it is competing for the Wynne Prize.
Fairbairn has paid for her husband to attend a pork butchery course at the local butchers, Victor Churchill. “I cook a lot,” says Gor, “especially pork.”