Coolabah Capital Investments’ has one of the largest local investment-grade fixed-income teams with 28 executives, including 5 portfolio managers and 16 analysts (with 4 PhDs), committed to delivering its investors active credit “alpha” rather than simply chasing yield by assuming more risk (or “beta”). This alpha is extracted by relentlessly exploiting bond mispricings identified via unique quantitative research capabilities that use artificial intelligence, amongst other advanced methods…
The intellectual edge: Making Every Basis point count
Coolabah Capital Investments (CCI) is a leading active credit alpha generator that is responsible for managing numerous institutional mandates, the Smarter Money Investments’ product suite, and the BetaShares Active Australian Hybrid ETF (ASX: HBRD). CCI manages over $7 billion as at July 2021.
CCI’s edge is in “alpha” generation in liquid, high-grade credit in contrast to traditional fixed-income strategies that drive returns through chasing yield by adding more interest rate duration risk, credit default risk, and/or illiquidity risk (called “beta”).
This alpha is a function of the world-class analytical insights rendered by CCI’s human capital, which includes 28 executives with a long-term track-record of delivering prescient macro and quantitative insights. In 2019, CCI’s portfolio managers were selected as one of FE fundinfo’s Top 11 “Alpha Managers” based on their risk-adjusted performance across all asset-classes. Click on the below video to learn more about CCI’s philosophy, people and products…
- One of the largest fixed-income investment teams, including 18 analysts, 5 portfolio managers, and 28 executives (including 4 PhDs) across Sydney, Melbourne and London focused on pure alpha generation
- One of the most active fixed-income investors, trading more than $25 billion in physical bonds in 2020 across the capital structure, including approximately $1 billion of trades in bank bonds and hybrids in the difficult month of March 2020
- Among the deepest quantitative credit research capabilities, which searches for bond mispricings globally using differentiated techniques, including artificial intelligence (see our published research here)…
Coolabah's LONG-SHORT CREDIT FUND (LSCF)
DAILY LIQUIDITY, SHORT DURATION, AV. AA- RATING
CCI’s near-zero duration, daily liquidity Long Short Credit Fund (LSCF) targets returns above the RBA cash rate plus 4% to 6% pa over rolling 3 year periods after fees with volatility of less than 5% pa.
LSCF harnesses CCI’s active credit alpha style that focusses on systematically exploiting mispricings to generate capital gains (alpha) in addition to yield. By doing so, LSCF seeks to deliver credit alpha that is mostly uncorrelated with traditional fixed-income, equities and property and broadly unrelated to interest rate duration risk, credit risk and/or illiquidity risk.
LSCF can also opportunistically profit from both bond price rises and falls through-the-cycle by going both long or short mispricings.
Since inception LSCF has outperformed the HFRI Credit Hedge Fund and the Bloomberg Credit Hedge Fund Indices net of fees.
LSCF is available to both institutional and retail investors, listed on numerous platforms, and rated by independent researchers, including Atchison, Foresight Analytics, Lonsec, Mercer & Zenith.
LSCF is typically classified in the unconstrained fixed-income, high-yield, or defensive alternatives universes.
- Active alpha: 3.6% to 3.9% net retail return (5.52% gross) last 12 months and 4.4% to 4.7% pa net retail return since inception in August 2017*
- Investment-grade: Daily liquidity, near-zero duration, av. AA credit rating, available to retail and institutional investors
- Risk-managed: Since inception volatility of 3.10% pa
*Past performance does not assure future returns. Returns are shown over 12 months to 31 October 2021 and quoted after all fund fees. The Smarter Money Long-Short Credit Fund has returned 4.44% to 4.67% p.a. net of all fees since inception on 31 August 2017. Retail product fees can vary depending on the unit class selected and/or whether the financial advisory firm has negotiated access to lower cost unit classes. Return volatility is shown since inception in August 2017.
COOLABAH'S SMARTER MONEY HIGHER INCOME STRATEGY
DAILY LIQUIDITY, SHORT DURATION, AV. A+ RATING
CCI’s near-zero duration, daily liquidity Smarter Money Higher Income Fund (SMHI) targets returns above the RBA cash rate plus 1.5% to 3.0% pa after all fees with an average A target credit rating.
SMHI is a daily liquidity solution that invests in cash and fixed-income assets that are hedged to a floating-rate (ie, not fixed-rate) exposure that means it has near-zero interest rate (duration) risk.
SMHI actively invests in a portfolio of Australian cash securities and bonds with a target dollar-weighted average credit rating in the “A” band. SMHI does not invest in fixed-rate bonds (unless interest rate risk is hedged out) or equities. SMHI is not permitted to use leverage.
It ranks No1 in FE fundinfo’s Cash Enhanced universe over the last 3 and 5 years as at September 2021. Please read more about the rating and disclaimer here. Past performance does not assure future returns and investors should read the PDS to better understand this strategy’s risks.
- Active alpha: 1.18% to 1.33% net retail return (2.04% gross) last 12 months and 2.8% to 3.0% pa net retail return since inception in October 2014*
- Investment-grade: daily liquidity, av. AA- credit rating
- Risk managed: since inception volatility of 0.86% pa
COOLABAH ACTIVE COMPOSITE BOND FUND (HEDGE FUND)
DAILY LIQUIDITY, LONG DURATION, AV. AA- RATING
NOW AVAILABLE THROUGH TICKER
OR APIR CODE
We are delighted to introduce our market-leading, daily liquidity, long duration, Coolabah Active Composite Bond Fund (Hedge Fund). This was previously an institutional strategy for super funds that was not available to the public, which we are now excited to bring to you as a quoted fund.
Since the Coolabah Active Composite Bond Fund’s (Hedge Fund) inception in March 2017, it has returned 4.13% per annum after retail fees. That’s 1.10% above the Composite Bond Index’s 3.03% per annum return. It ranks in the top 2 strategies in Mercer’s Australian fixed-income (active) universe over the last 3 years to 30 June 2021. (Please note past performance does not assure future returns. Please read the PDS to better understand the fund’s risks, which can be found here.)
The Coolabah Active Composite Bond Fund (Hedge Fund) targets returns in excess of the Bloomberg AusBond Composite 0+ Yr Index, after management costs, by 1.0% to 2.0% per annum over rolling 12 month periods.
The Coolabah Active Composite Bond Fund (Hedge Fund) is now available as an exchange quoted managed fund on Chi-X Australia under the ticker FIXD. The Fund is also accessible by applying directly with the Fund Administrator, Mainstream Fund Services, under the APIR Code ETL2716AU, through our online application form.
You can find out more about the Fund, including a copy of the Product Disclosure Statement on the Fund’s page here.
- Active alpha: 4.9% pa net retail return since inception vs AusBond Composite Bond Index’s 3.0% pa
- Investment-grade: daily liquidity, av. AA credit rating, long duration passively targeting the index
- Risk managed: since inception volatility of 3.47% pa
This is an interview published on Livewiremarkets.com recently with Jason Lindeman, Head of Credit Research at Coolabah Capital Investments.
Jason has seen some unusual things in his three decades managing credit. From Argentinian gaming companies operating from river boats, European and UK poultry farms when bird flu first hit, an Italian dairy company with fraudulent bank statements, Bulgarian steel plants, and a CFO who was apprehended at an airport with $500k in his suitcase, it’s safe to say he’s a hard man to surprise. But upon returning to Australia and taking a position at Coolabah, he said he was blown away by the intensity and depth of the due diligence process. Lindeman also reveals that Coolabah uses artificial intelligence to rate every bond globally, and has traded actively on these unique insights.
- Don’t search for yield, search for mispricings.
- Focus on minimising risk, look for implicit government guarantees such as ‘too big to fail’ institutions.
- Never forget the definition of credit quality: “the ability of an entity to withstand both internal and external shocks.” Avoid companies that can’t withstand shocks.
From 5 October 2021, a Target Market Determination (TMD) is required to be made available under the Design & Distribution Obligations. It describes who this financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors. It also describes the events or circumstances where the Target Market Determination for this financial product may need to be reviewed.
Disclaimer: Past performance does not assure future returns. Returns are shown over 12 months to 31 October 2021 and quoted after all fund fees for retail products. Fees are individually negotiated for institutional strategies. Retail product fees can vary depending on the unit class selected and/or whether the financial advisory firm has negotiated access to lower cost unit classes.
Equity Trustees Limited (Equity Trustees) ABN 46 004 031 298 AFSL 240975, is the responsible entity for the Smarter Money Long-Short Credit Fund (LSCF), the Smarter Money Higher Income Fund (SMHI) and the Coolabah Active Composite Bond Fund (Hedge Fund) (Ticker: FIXD). 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).
This information has been prepared by Coolabah Capital Investments (Retail) Pty Limited, 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 Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the funds should be considered before deciding whether to acquire or hold units in it. A PDS and TMD for these products can be obtained by visiting www.coolabahcapital.com. Neither Coolabah Capital Investments (Retail) Pty Limited, Equity Trustees Limited nor its 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. Coolabah Capital Investments (Retail) Pty Limited (ACN 153 555 867) is an authorised representative (#000414337) of Coolabah Capital Institutional Investments Pty Ltd (AFSL 482238).
Ratings & Research Disclaimers
The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned ETL8504AU, SLT3458AU, ETL2716AU & FIXD June 2021) 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.