Colonial First State Eyes Credit Investment Bulk Up
Colonial First State Investments, the fund management arm of the Commonwealth Bank of Australia with over AUD87 billion (USD48.9 billion) under management, is considering boosting its presence in the credit-default swap market next year as an alternative to cash bonds for its AUD1.3 billion credit fund. Tony Adams, senior portfolio manager of credit funds in Sydney, said credit derivatives currently account for about 15% of the firm's portfolio but they could account for up to 30%.
"We're always looking for relative value opportunities," explained Adams, noting that Colonial First State looks to write credit protection on global names where the default-swap is cheaper than the underlying bond. The fund primarily uses credit-default swaps on Australian and U.S. names. However, Adams added the asset manager is considering investing in Asian credits.