Jamieson Coote Bonds (JCB) is a specialist active manager of high grade Australian and Global Government bonds. Founded in 2014, JCB is a privately owned boutique asset manager that exists to enable investors to access one of the most reliable fixed incomes assets. The investment philosophy is centred on duration management and targeted security bond selection that can drive returns over appropriate time horizons. JCB has offices in Melbourne and Singapore.
"It was a little humbling to start from the very beginning": Q&A with Charlie Jamieson, CIO of Jamieson Coote Bonds March 2018
When he returned to Australia in 2011, after managing billion-dollar bond funds in the UK, Charlie Jamieson wanted to offer investors a high-grade government bond fund that wasn't then available in the local market. So with Angus Coote, Jamieson started up Jamieson Coote Bonds (JCB), an active government bond fund manager. The fund now has some serious runs on the board, and over $500 million in funds under management. Charlie speaks to Industry Moves about the boutique's humble beginnings and explains why government bonds are still so important.
- What is your approach to investing for this fund?
It is a no leverage, Australian dollar issued only, no complex derivatives, government-only bond fund. That’s something that there isn’t very much of in the Australian market. There are lots of very credit heavy type products available, which don’t give the defense and protection that high-grade government bonds do.
We like the fact that ours is quite easy to understand and plain vanilla by design.
Government bonds are a highly self-balancing asset class. The best thing is yields rise and rise. Even if they come under stress, governments can always tax their citizens.
- How has the strategy performed?
It has performed well in excess of cash. We haven’t really needed any of the more insurance type qualities the product is well known for.
It’s very pleasing to put up good numbers and see investors want to utilise that strategy. We’re invested in our funds personally and we feel we have very good alignment in the business. Our advisory board are all equity owners as well.
- Why did you develop this strategy?
Certainly as superannuants age, they need a different mix of assets. They are very susceptible to sequencing risk and we wanted to make sure there were these defensive products on the shelf for them as well.
- Why did you start up JCB?
I came back to Australia in 2011 and wanted to start something of this nature. It was quite niche at the time to offer something that was missing and lacking in the market.
The problem, as we saw it, was in these jack-of-all-trades bond strategies that have been available, 88% of managers hadn’t beaten the index, despite taking on substantive credit risk.
- What are your funds under management?
Currently it’s $540 million, of that $230 million is institutional. We’ve got some very interesting institutional investors, including many superannuation funds.
- What do you do differently to other managers in this space?
We have no corporate credit and then we are also an active manager. Certainly we are trying to be very precise in the risk allocations and are very proud of having quite low risk characteristics.
- What is it like to go from managing $US10 to $15 billion portfolios in the UK and US to starting up a boutique fund manager in Australia?
I’ve had to manage funds through some horrifying moments like 9/11 and then all the way through to the GFC and the Euro debt crisis. But coming back to Australia it has certainly been very humbling in many respects. It was a little humbling to start from the very beginning. Regardless of your prior experience the industry likes you to build a track record. I think we’ve pierced through that watch moment now.
- Do you think retail investors have enough exposure to bonds?
It’s highly under allocated at the moment and that’s been for a good reason. There was just A$45 billion in Federal government debt leading into the GFC and now that number has grown to A$800 billion across Federal and State governments.
The awareness seems to have grown materially and I think that’s been fostered by a little bit of market volatility of late. Superannuants are looking for different allocations inside their own superannuation portfolios.
- Do you have a mentor?
I think Mark Burgess (former Future Fund managing director and current chairman of Jamieson Cootes Bonds advisory board) plays that role for us here in Australia. He is very much around. He has been a manager and has a lot of experience around boutique funds management.
- What advice would you give yourself starting out?