About Us

Kapstream Capital (ABN 19 122 076 117, AFSL 308870) was founded in 2006 by Kumar Palghat and Nick Maroutsos, both seasoned fixed income portfolio managers.

Kapstream was founded on a simple belief; that by removing the constraints inherent in conventional benchmark-relative fixed income portfolio strategies, and by setting absolute return targets and absolute risk limits, portfolios could be constructed using predominantly investment grade assets that more closely met the true requirements of investors in preserving capital and delivering consistent and positive absolute returns.

Until then, more conventional fixed income managers typically built portfolios around issuance-based bond benchmarks – skewed to the largest borrowers, often not those offering the best return potential – who were more focused on preventing benchmark tracking error than delivering the best return potential. Kapstream concluded that they could consistently achieve positive results by going beyond the traditional core manager approach.

They decided to use a wide range of instruments including derivatives to exploit market inefficiencies across the full spectrum of fixed income investments, combined with the flexibility to move meaningfully into cash and government bonds at times of market uncertainty and stress.

Fixed Income Manager Universe

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Kapstream today

Today Kapstream manages A$14 billion from offices in Sydney and Newport Beach, California, mostly under the firms flagship global absolute return strategy.  Since July 2015 Kapstream has operated as an autonomous ’boutique’ subsidiary, initially of Janus Capital Group and – since their merger in May 2017 with Henderson Global Investors – now of Janus Henderson Investors. Kapstream has always believed in an outsourced business model, appointing external service providers to undertake all non-investment activities, so that we may stay entirely focused on what we do best; investing and managing fixed income portfolios. All back office, administrative and retail distribution services continue to be provided by long-term business partner Fidante Partners Limited, part of the Challenger Limited group of companies. Kapstream has been a keen and long-term supporter of a number of domestic and international charities. Our charitable program currently supports the following causes:

Funds under management as at December 2022 (AUD)
total fum $11.7bn
  • 2.6bn Kapstream Absolute Return Income Fund
  • 0.3bn Kapstream Absolute Return Income Plus Fund
  • 3.6bn Segregated Absolute Return Income Portfolios
  • 0.4bn Segregated Sovereign Bond Portfolios
  • 4.7bn Janus Henderson US Absolute Return Income Funds
  • 0.1bn Janus Henderson US Absolute Return Income Plus Funds
Latest Commentary

Hello (again) CINDY!

For a time, the benefits from allocations to fixed income were vastly reduced as interest rates were lowered to stimulate our way out of the pandemic. Investors, in their chase for yield, reallocated into higher yielding and more volatile sectors within the asset class, either going down the credit spectrum, capital structure or giving up liquidity to seek a positive yield. For a while, TINA (‘There Is No Alternative’, to equities, or riskier debt categories) dominated. Times are now changing. The surge in inflation that came out of the pandemic, reflecting both supply side issues and the stimulus it prompted, has seen interest rates rise. The surge in prices and resulting monetary policy response from central banks has damaged economic growth, negatively impacting earnings and equity prices. At the same time, the rise in interest rates has seen fixed income become more attractive in a relative sense. Step aside TINA. CINDY (‘Credit Is Now Delivering Yield’) has returned!
Hello (again) CINDY! (248.05 KB )
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The global absolute return fixed income specialist.