Why Kellie Wood is happy she ignored her former mentor's advice

Throughout our series profiling Australia's top female money managers, we've heard a lot from women who persevered with their careers thanks to the words of their mentors. In her story, Nikki Thomas highlighted the influence of one of her bosses in stock broking. While in her story, Diana Mousina a highlighted several top economists as sources of encouragement during her career.

Schroders' Australian deputy head of fixed income Kellie Wood is no different. She counts current colleague Simon Doyle as a mentor on the investment philosophy side, and UBS giants Stuart Piper and Anne Anderson as those who guided her early education on fixed income.

Anderson, in particular, was a major influence - she was one of the few female leaders in her field at the time. 

"Especially as a woman in finance, I always looked up to [Anderson]. I wanted to run an investment team one day like her and I wanted to be just as good," she says.

But Wood did something that not everyone is game to do - deliberately going against a piece of advice given to her by one of those mentors.

As crazy as that might sound, the gamble appears to have more than paid off. 

Today, Wood is a leader in her field while balancing her other lives as a mother of two (very active) boys and manager of several club sporting teams. Oh, and did I mention, she's got two international holidays coming up in the next six months?

In this wire, we'll uncover the story behind Kellie Wood, get her take on markets, and find out about some of her other interests away from the desk.

Livewire is pleased to feature Kellie Wood as part of its International Women’s Day coverage, profiling established and up-and-coming female investment leaders in Australia. We are dedicated to featuring more female chief investment officers, portfolio managers and analysts in our articles, podcasts and videos.

Kellie's Profile

• Name: Kellie Wood - Deputy Head of Fixed Income, Australia
• Firm: Schroders
• Years in the industry: 25 years
• Specialty: Fixed Income/ Macro
• Biggest personal portfolio holding: Real estate
• One thing very few people know about you: I have won several dance competitions.
• Your guilty secret TV or reading pleasure: Married at First Sight (MAFS) - "It's just rubbish, right? I just enjoy the scandal and it's something light after a heavy day."

The story so far

Born in the northern New South Wales town of Lismore, Wood moved to Sydney for school at the age of five. And although her list of mentors includes some well-known names, her biggest influence of all was very close to home.

"My father was in banking so we spent a lot of time travelling around. He was probably my biggest influence going into finance as well as a love of maths and macro," she says.

At university, she did a Bachelor of Commerce (honours) with majors in economics and finance. From there, she started as a rotator at the old AMP Capital. For two years, she tried and tested different sectors, styles, and investments before settling on fixed income.

"I certainly chose the more technical asset class, but I was up for the challenge," Wood recalls.

From there, she became a junior fixed income portfolio manager at UBS Global Asset Management where she learned everything she knows about the asset class. 

"I gained experience in trading/execution, portfolio construction and the formulation of strategy for investment decision-making. UBS was a place where I could flex my existing knowledge, get support, hone my skills and truly grow as a fixed income investor," she says.

Then, just as the Global Financial Crisis hit our shores, Wood decided to make an almighty pivot away from managing money and into building a business. And she did it in spite of a key bit of advice from a mentor.

"An early mentor once said to me ‘Kellie - There are only three rules about investment management – 1) stay close to the money 2) stay close to the money 3) stay close to the money’. On this occasion I moved away from managing the money to help build out a fixed income business – and the risk paid off!" Wood says.

The business is now known today as Schroders' Australian fixed income arm. It's grown from its infancy to now managing $8 billion in assets under management. 

"Being involved in building a fixed income business from the ground up has really given me a great opportunity to carve out my own career and broaden my capabilities beyond just managing the money," she says.

Her advice for emerging talent

Wood has five tips for anyone wanting to make it big:

1. Take risks! It’s what will get you places!

2. Surround yourself with investors you can really learn a lot from

3. Be strong and confident, speak up and have conviction

4. Seek out sponsors or supporters within the business that will always champion your success

5. Make sure you are valued - get involved and keep challenging yourself to do things differently. 

Her core investment philosophy

Wood's own investment philosophy stems from a four-point plan. 

• A robust framework to balance income and capital
• The diversity of fixed income can significantly improve outcomes
• Active asset allocation and security selection can improve returns and defensiveness
• Exposure should be diversified and unrewarded risks avoided

In turn, this philosophy has been shaped by numerous mentors who challenged her to think about the right balance between the macro and the fundamentals of individual assets.

"They have challenged my thinking around top-down vs bottom-up investment approaches in fixed income and how to strike the right balance between valuations and the cycle. And probably most importantly, they’ve helped me think more strategically," Wood says.

Her market views

Unsurprisingly, rising interest rates from central banks are supportive of available yields. But rising inflation and the risk of stagflation also make a big impact on real returns in portfolios.

"Fixed income has come from being boring, to terrifying, and now exciting and offering great value," Wood says. "Expected returns have risen to the highest levels in over a decade where this asset class now stands out as offering good absolute and relative value."

She also argues markets have not priced in a recession yet across any of the major asset classes.

"This keeps us defensively positioned, preferring government bonds and high-quality investment grade over riskier credit like high yield and equities," she adds.

Wood's top opportunities

With a recession very possible, Wood argues that bond markets could deliver double-digit returns where equities have done so for most of the previous decade.

So where would Wood be investing clients' money? She's finding opportunities in government and high-quality corporate credit. After the brutal experience of 2022, she believes the bulk of the repricing is behind us. And that's good news for investors.

"With most of the rate repricing behind us, higher quality corporates now offer attractive yield levels for medium-term investment horizons. Australian investment grade credit stands out as particularly appealing given its high risk-adjusted spread and outright yield of around 5%," Wood says.