Biography
Michelle joined NZ Funds in 2007 and is primarily responsible for selecting and monitoring fixed income securities.  Michelle started her career at the New Zealand Treasury in 2000.  She then moved to Australia to work as an economic consultant, developing knowledge and experience in utilities and market regulation.  Since returning to New Zealand, she has gained experience with some of New Zealand’s leading companies, including Fonterra, Telecom and the Bank of New Zealand. 

Approach
My investment approach encompasses the core principles that guide me in all aspects of my life.  I believe that success and reward come from planning, discipline and working smarter.  Planning involves setting goals and developing a process to achieve those goals.  Implementing and adhering to a plan requires discipline and effort.  However effort alone will not necessarily achieve the most favourable outcome.  Effort needs to be coupled with an understanding of best practice – ie working smarter.  Many of us have learnt the hard way that effort is not necessarily rewarded if things are done the wrong way.  Dare I mention the All Blacks and the World Cup?

When translating these principles to my assessment of fixed income products, foremost in my mind is what we are trying to achieve for clients.  The recent market down-turn has reminded us of the importance of protecting investors from risks that are not consistent with their investment goals.  In a bull market it is easy for risks to be downplayed in favour of generating higher returns.  Unfortunately, when markets correct, investors taking inappropriate risks can find themselves with large capital losses for which they were not prepared.  Our job as investment professionals is to help clients to understand their individual risk profile and provide products that allow clients to appropriately tailor their investment portfolio. 

Another principle that I believe is fundamentally important in fixed income investing is understanding the unique features and nuances of each individual security. The phrase “the devil is in the detail” is particularly apt.  Often the unique features of a security are not well understood, even though they can have a substantial impact on the capital price and return.  These features can impact: priority of principal and interest repayment, ownership structure, coupon rate and maturity. It is my job to understand these features and consider what impact they may have under different economic conditions.  If the detail is overly complex, the investment should be treated with caution.