WANT TO CAPITALISE ON RISING RATES...OR ARE YOU WORRIED ABOUT A RECESSION?
Looking for Higher Target Returns?
Long-Short Credit PIE Fund
- Floating-rate strategy with an av. A+ portfolio credit rating
- Currently yielding 8.6% p.a. (before fees and tax)
- Returned 13.1% over 12 months to 30 June ’24 (net of fees but before tax)
- Daily redemption rights
- Please read the PDS to better understand the risks, and note that past performance does not assure future returns
Coolabah’s Long-Short Credit PIE Fund (LSCP) is currently yielding 8.6%* p.a. (before fees and tax) and has the majority of its holdings in senior and Tier 2 bonds primarily issued by Australia’s four biggest banks. This portfolio is floating-rate and benefits from higher interest rates.
LSCP currently invests in the Smarter Money Long-Short Credit Fund (Underlying Fund), an Australian unit trust managed by Coolabah. The underlying returns are hedged back to NZD.
The Underlying Fund is permitted to invest in Australian and global bonds, such as government and semi-government bonds, bank and corporate bonds, hybrid and asset-backed securities, including residential-mortgage-backed securities as well as cash, cash equivalents and related derivatives. It can borrow, use derivatives and short-sell, meaning it may be geared (or leveraged). Leverage can amplify gains and also amplify losses.
It also has an average A+ credit rating and offers daily redemption rights. It does not invest in private debt, or equities. The Underlying Fund holds a “Recommended” rating by the research houses Lonsec and Zenith.
Over the last 12 months to 30 June 2024, LSCP has returned 13.1% (net of fees but before tax) compared to the RBNZ overnight interbank cash rate’s 5.7%, providing net excess returns of 7.4%. Since its inception in December 2021, LSCP has returned 6.9% p.a. (net of fees but before tax) compared to the RBNZ overnight interbank cash rate’s 4.1% p.a., providing net excess returns of 2.8% p.a.
The Underlying Fund has returned 5.2% p.a. (net of fees but before tax) since its inception in August 2017.
Looking for Higher Income?
Floating-Rate High Yield PIE Fund
- 100% floating-rate, 100% Australian bonds
- Av. A+ portfolio credit rating
- Currently yielding 9.3% pa before fees and tax
- Daily redemption rights
- Please read the PDS to better understand the risks, and note that past performance does not assure future returns
The Coolabah Floating-Rate High Yield PIE Fund (FRHYP) is currently yielding 9.3%* p.a. (before fees and tax) with geared exposure to senior and Tier 2 bonds primarily issued by Australia’s four biggest banks.
It focuses on generating higher income than other traditional fixed income investments by investing in a portfolio of investment-grade Australian Floating-Rate Notes (FRNs) with enhanced yields.
It achieves this by investing in the Coolabah Floating-Rate High Yield Fund (Underlying Fund), an Australian unit trust managed by Coolabah. The underlying returns are hedged back to NZD.
The Underlying Fund currently invests in a portfolio of cash securities and floating-rate, Australian bank and insurer issued senior and Tier 2 bonds with an average rating of “A+”. It has the capacity to invest in Australian government bonds and Australian corporate bonds.
In contrast to fixed-rate bonds, FRNs pay a variable-rate of interest that resets monthly or quarterly and moves up and down with changes in a recognised reference interest rate. In Australia, FRNs generally track the returns of the Reserve Bank of Australia’s (RBA’s) cash rate via a benchmark proxy called the quarterly Bank Bill Swap Rate (BBSW) plus an additional credit spread, or interest rate margin above BBSW.
Unlike a fixed-rate bond, a FRN has very low interest rate risk given the interest paid by an FRN will be highly correlated with moves in the RBA cash rate.
The Underlying Fund holds a “Recommended” rating by the research house Zenith.
Over the last 12 months to 30 June 2024, the Underlying Fund has returned 12.6% (net of fees but before tax). Since its inception in December 2022, the Underlying Fund has returned 13.0% p.a. (net of fees but before tax) compared to the Bloomberg AusBond Credit FRN 0+ Index’s 6.5% p.a., providing net excess returns of 6.5% p.a.
Floating-Rate Bond Exposure
Short Term Income PIE Fund
- Floating-rate bond exposure
- Av. A+ portfolio credit rating
- Currently yielding 6.7% p.a. (before fees and tax)
- Returned 7.9% net of fees over 12 months to 30 June ’24
- Please read the PDS to better understand the risks, and note that past performance does not assure future returns
The Coolabah Short Term Income PIE Fund (STIP) is a zero duration, short-term fixed-interest investment solution that targets returns that outperform the RBNZ cash rate by 1.5% – 3.0% per annum after all fees and before tax, over rolling 12 month periods.
It has a current running yield of 6.7% p.a. before fees and tax.
This strategy gains exposure to an actively managed portfolio of Australian cash securities and investment-grade floating-rate notes with a target dollar-weighted average credit rating in the “A” band hedged to NZ dollars. It achieves this by investing in the Coolabah Short Term Income Fund, an Australian unit trust managed by Coolabah.
All fixed-income assets are hedged to a floating-rate (ie, not fixed-rate) exposure that means it has near-zero interest rate (duration) risk. It does not invest in fixed-rate bonds (unless interest rate risk is swapped out) or equities.
The Underlying Fund holds a “Superior – Relatively Simple” rating from Foresight Analytics and a “Recommended” rating from Lonsec Research.
Over the last 12 months to 30 June 2024, STIP has returned 7.9% (net of fees but before tax) compared to the RBNZ overnight cash rate’s 5.7%, providing net excess returns of 2.2%.
Since its inception in December 2021, STIP has returned 4.6% p.a. (net of fees but before tax). The Underlying Fund has returned 3.6% p.a. (net of fees but before tax) since its inception in October 2014.
Worried About A Recession?
Active Composite Bond PIE Fund
- Daily liquidity
- Offers fixed-rate bond exposure (rather than floating-rate)
- Av. A+ portfolio credit rating
- Currently yielding 7.7% p.a. (before fees and tax)
- Please read the PDS to better understand the risks, and note that past performance does not assure future return
For those worried about a recession where market interest rates fall, we recently made available a fixed-rate bond strategy, the Coolabah Active Composite Bond PIE Fund (ACBP). This strategy benefits from declining bond yields that normally emerge in a recessionary climate, thereby enabling investors to offset a decline in cash income levels. It has a current running yield of 7.7% p.a. (before fees and tax) and has outperformed all key peers and the Composite Bond Index (hedged to NZD) since its inception.
ACBP currently invests in the Coolabah Active Composite Bond Fund (Underlying Fund), an Australian unit trust managed by Coolabah. The underlying returns are hedged to NZD.
The Underlying Fund offers an actively managed fixed-income strategy focused on mispricings in government and corporate bond markets with an interest rate duration risk broadly similar to that of the Bloomberg AusBond Composite 0+ Yr Index.
It is rated “Recommended” by the researcher Lonsec and “Recommended” by Zenith.
Over the last 12 months to 30 June 2024, the underlying fund has outperformed the Index by 4.4% after fees but before tax. Since its inception in March 2017, the underlying fund has outperformed the Index by 1.4% p.a. after fees but before tax.
*Disclaimer: As of 30 June 2024. Returns are shown after all fees but before tax. Yields are shown before management fees, performance fees and tax. Both returns and yields can change daily and may be different on the day you invest. All investments carry risks, including that the value of investments may vary, future returns may differ from past returns, and that your capital is not guaranteed. The funds have a different risk profiles to the other comparisons, including, amongst other things, that they invest in bonds, not hybrids or equities, and that they can use leverage, which means that both gains and losses may be amplified. To understand the Fund’s risks better, please refer to the respective Product Disclosure Statement (PDS).
The Coolabah Short Term Income PIE Fund (STIP) invests into the Coolabah Short Term Income Fund (STIF). The Coolabah Floating-Rate High Yield PIE Fund (FRHYP) invests into the Coolabah Floating-Rate High Yield Fund (FRHY). The Coolabah Long-Short Credit PIE Fund (LSCP) invests into the Smarter Money Long-Short Credit Fund (LSCF). The Coolabah Active Composite Bond PIE Fund (ACBP) invests into the Coolabah Active Composite Bond Fund (ACBF). These underlying funds are Australian unit trusts managed by Coolabah. The returns displayed for the underlying funds are estimated in NZD based on the actual AUD returns with 1 month forward contracts.
FRHY, LSCF and ACBF, can take long and short positions, use repurchase agreements, borrow and use derivatives, meaning the underlying funds may be geared (or leveraged). Leverage can amplify gains and also amplify losses. These features mean that the Fund will not be appropriate for all investors.
Public Trust is the Supervisor and FundRock NZ Limited (FundRock) is the issuer and manager of the Coolabah Investment Funds (Scheme), including STIP, FRHYP, LSCP and ACBP. Coolabah Capital Investments (Retail) Pty Ltd ACN 153 555 867 (Coolabah) is the Investment Manager.
Equity Trustees Limited (Equity Trustees) ABN 46 004 031 298 AFSL 240975, is the responsible entity for the underlying funds. Equity Trustees is a subsidiary of EQT Holdings Limited ABN 22 607 797 615, a publicly listed company on the Australian Securities Exchange (ASX: EQT). Coolabah is the Investment Manager. Coolabah is an authorised representative of Coolabah Capital Institutional Investments Pty Ltd ABN 85 605 806 059 AFSL 482238.
This information has been prepared by Coolabah, a wholly owned subsidiary of Coolabah Capital Investments Pty Ltd. It is general information only and is not intended to provide you with financial advice. You should not rely on any information herein in making any investment decisions. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. The PDS for the funds should be considered before deciding whether to acquire or hold units in it. A PDS can be obtained by visiting www.coolabahcapital.com. Neither Coolabah, Public Trust, FundRock, Equity Trustees nor their respective shareholders, directors and associated businesses assume any liability to investors in connection with any investment in the funds, or guarantees the performance of any obligations to investors, the performance of the funds or any particular rate of return. The repayment of capital is not guaranteed. Investments in the funds are not deposits or liabilities of any of the above-mentioned parties, nor of any Authorised Deposit-taking Institution. The funds are subject to investment risks, which could include delays in repayment and/or loss of income and capital invested. Past performance is not an indicator of nor assures any future returns or risks.
Ratings & Research Disclaimers
Lonsec Research
The rating issued 10/2023 SLT0052AU, 10/2023 SLT2562AU, 10/2023 ETL2716AU, 10/2023 FIXD are published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. © 2023 Lonsec. All rights reserved.
Zenith Investment Partners
The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned ETL8504AU June 2024, ETL2716AU & FIXD June 2024, SLT3458AU June 2024) referred to in this piece is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual, including target markets of financial products, where applicable, and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at Fund Research Regulatory Guidelines.
