September 2025
Fund: Coolabah Long-Short Credit PIE Fund
Strategy: Alternatives/Unconstrained Fixed-Income
Return (since Dec. 2021): 7.23% pa net
Net return volatility (since Dec. 2021): 2.98% pa

Objective: The Fund targets investment returns, after fees and before tax, of 4% to 6% per annum above the overnight interbank cash rate as published by the Reserve Bank of New Zealand (RBNZ), with less than 5% per annum volatility over rolling 3 year periods.

Strategy: The Fund provides exposure to an actively managed, absolute return fixed-income strategy focused on exploiting long and short mispricings in global credit markets. The Fund currently invests in the Smarter Money Long-Short Credit Fund (Underlying Fund), an Australian unit trust managed by Coolabah. The Fund targets a position of being fully hedged back to New Zealand dollars.
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, issued in Australian Dollars or hedged to Australian Dollars, 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.

Period Ending 2025-09-30Net Return†RBNZ Overnight Cash RateNet Excess Return‡
1 month0.66%0.26%0.40%
3 months2.25%0.78%1.46%
6 months3.86%1.63%2.22%
1 year7.49%3.80%3.69%
3 years pa10.62%4.68%5.94%
Inception pa Dec. 20217.23%4.03%3.20%
Underlying LSCF Strategy*
5 years pa6.26%3.12%3.14%
Inception pa Sep. 20175.64%2.43%3.21%

* The underlying strategy is an Australian unit trust. The returns displayed are estimated in NZD based on the actual AUD returns with 1 month forward contracts. † Net returns are calculated from the historic gross returns using the current fee structure as displayed in the PDS. ‡ The Excess Return columns represent the gross and net return above the AusBond Bank Bills Index hedged to NZD. # The yields shown are estimates based on the yield of the underlying strategy hedged to New Zealand Dollar (NZD) using the NZD Bank Bill 3 Month Index (NDBB3M) and the AUD Bank Bill 3 Month Index (BBSW3M).

Disclaimer: Past performance does not assure future returns. Returns and yields are shown net of management fees and costs unless otherwise stated. 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. To understand Fund’s risks better, please refer to the Product Disclosure Statement available at Coolabah Capital Investments' website.
Note: all portfolio statistics other than yields and duration are reported on gross asset value
Av. Portfolio Credit Rating A+ Gearing Permitted? Yes
Portfolio MSCI ESG Rating AA 1 Year Av. Gross Portfolio Weight to Cash 5.3%
No. Cash Accounts 32 Gross Portfolio Weight to AT1 Hybrids 0.0%
No. Notes and Bonds 208 Gross Cash Accounts + RBA Repo-Eligible Debt 68.2%
Av. Interest Rate (Gross Running Yield) 5.52% Net Annual Volatility (since incep.) 2.98%
Modified Interest Rate Duration 0.38 years Underlying Strategy Ratings: Recommended (Lonsec); Recommended (Zenith); Superior - More Complex (Foresight Analytics)
Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)
Disclaimer: Past performance does not assure future returns. Returns and yields are shown net of management fees and costs unless otherwise stated. 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. To understand Fund’s risks better, please refer to the Product Disclosure Statement available at Coolabah Capital Investments' website.
The since inception net return of 7.23% pa net is the total annual return earned by the fund since Dec. 2021, including interest income and movements in the price of the bond portfolio after all fund fees (assuming net returns are calculated from the historic gross returns using the current fee structure as displayed in the Product Disclosure Statement). The net return quoted applies to the Coolabah Long-Short Credit PIE Fund, with quarterly distributions reinvested. Investment return will vary depending upon investment date and any additional investments and withdrawals made. The annualised volatility estimate of 2.98% pa is based on the standard deviation of net daily returns since inception, which are then annualised, attributable to the Coolabah Long-Short Credit PIE Fund.
Portfolio Managers Christopher Joye, Ashley Kabel, Roger Douglas, Fionn O'Leary (Coolabah Capital Investments)
Fund Inception 09-Dec-2021 Distributions Quarterly
Morningstar Ticker 25326 Unit Pricing Daily (earnings accrue daily)
Asset-Class Alternatives/Hedge Funds Min. Investment NZD$1,000
Target Return Net 4.0%-6.0% pa over RBNZ cash rate Withdrawals Daily Requests (funds normally in 4 days)
Investment Manager Coolabah Capital Investments (Retail) Buy/Sell Spread 0.00%/0.05%
Supervisor Public Trust Mgt. & Admin Fee 1.00% pa
Manager FundRock NZ Perf. Fee 20.5% of returns over AusBond Bank Bills Index hedged to NZD + 1% pa
Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)

In the commentary below, returns indicated with * are estimated returns in NZD based on AUD returns hedged to NZD with 1m forward contracts. All other returns are NZD Denominated where unit classes in NZD exist, and estimated from AUD returns hedged to NZD using 1m forward contracts before the inception of the NZD unit class. Strategy commentary is for the AUD Market.

Portfolio commentary: In September, the zero-duration daily liquidity Long-Short Credit PIE Fund (NZLSCP) returned 0.66% net, outperforming the AusBond Bank Bill Index* (0.25%), the RBNZ Overnight Cash Rate (0.26%), and the AusBond Credit FRN Index* (0.39%). Over the previous 12 months, NZLSCP returned 7.49% net, outperforming the RBNZ Overnight Cash Rate (3.80%), the AusBond Bank Bill Index* (3.84%), and the AusBond Credit FRN Index* (4.92%). NZLSCP ended September with a running yield of 5.52% pa, a weighted-average credit rating of A+, and a portfolio weighted average MSCI ESG rating of AA.

Since the inception of NZLSCP 3.8 years ago in December 2021, it has returned 7.23% pa net, outperforming the AusBond Bank Bill Index* (4.00% pa), the RBNZ Overnight Cash Rate (4.03% pa), and the AusBond Credit FRN Index* (4.88% pa). While NZLSCP's return volatility since inception has been low at around 2.98% pa (measured using daily returns), as a daily liquidity product with assets that are marked-to-market using executable prices, volatility does exist. This contrasts with illiquid credit (eg, loans and high yield bonds) wherein assets that have very high risk can appear to have remarkably low volatility, which is, in fact, just a mirage explained by the inability to properly value these assets using executable prices.

Strategy commentary: There was a secular risk rally in September as the US Federal Reserve belatedly cut interest rates, which—save for a few notable exceptions—powered price appreciation in both bond and equity markets around the world.

As 10-year government bond yields declined in many markets, including the US (-8bps), Italy (-5bps), the UK (-2bps), and Germany (-1bps), duration rallied solidly, with the benchmark 5.9-year-duration Bloomberg Global Aggregate Corporate Bond Index rising 1.17%.

In New Zealand, there was an especially sharp 17bps decline in 10-year government bond yields after second-quarter GDP growth plunged 0.9%, which was substantially worse than the central bank's expectation of a 0.3% contraction. This will likely compel the RBNZ to cut rates more aggressively, with markets now pricing in a terminal rate of only 2.25% (or three standard 25bps cuts). This is materially below the RBNZ's ~3% estimate of neutral.

Bucking this trend were modest increases in 10-year yields in Australia (+2bps) and France (+2bps), driven by burgeoning inflation and fiscal fears, respectively. Instability in France's political decision-making processes is creating significant anxieties in bond markets regarding a further deterioration in its already bloated budget deficit, which is almost 6% of GDP. A key point of political friction has been the 2023 increase in the retirement age from a globally low 62 years to 64 years.

In Australia, a new monthly inflation series pointed to a reacceleration of core inflation in August, with all eyes now focused on the official third-quarter print in late October. While the RBA had been projecting a 0.6% increase in trimmed mean inflation for the September quarter, the August monthly release has forced consensus estimates much higher, to around 1%. This sits uncomfortably with both the RBA's inflation target and its current easing bias.

The RBA had signalled that it would be prepared to cut rates again toward its neutral estimate in the low 3% zone if the quarterly pace of underlying inflation remained contained at around 0.7% to 0.8%. A much higher number, however, could force the current easing cycle to end at a cash rate almost one percentage point above the RBA's formal quantitative estimates of neutral, which average around 2.7%. In their defence, RBA officials have repeatedly downplayed their statistical neutral estimates, asserting that a more reasonable guide is likely to be in the low 3% vicinity.

It is worth stressing that there are signs of sticky services inflation in many countries, including the US and UK, and Coolabah assesses that there is a non-trivial risk that some central banks may have to reverse course on rate cuts in 2026 and/or 2027.

Tighter credit spreads in Europe (-7bps), the UK (-7bps), the US (-5bps), and Australia (-3bps) helped the duration-hedged version of the Bloomberg Global Aggregate Corporate Index appreciate by a healthy 0.81% in September.

Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)

Strategy commentary cont'd: In Australia, there was more striking spread compression further down the capital structure: whereas 5-year major bank senior bond spreads contracted 3bps in the month, Tier 2 subordinated bonds (-7bps) and AT1 hybrids (-14bps) outperformed. This is likely being driven by a search for all-in yield as cash rates have declined.

Equity markets mostly rallied firmly in September, led by the Nasdaq (5.4%), the S&P 500 (3.5%), the Eurostoxx 50 (3.3%), the NZX 50 (2.8%), and the FTSE 100 (1.8%). As future RBA rate cuts were called into question, the ASX 200 fell 0.8%.

While oil prices slipped further (Brent down 1.6%), gold continued its march toward US$4,000 (US$3,859). Bitcoin also rose 6.4% to US$114,641, although it remains below recent peaks.

September saw $216 billion in USD investment-grade credit issuance, marking the fifth-highest month ever by volume and the largest by number of tranches. The financial sector accounted for nearly 44% of the supply, bringing total YTD issuance to $1.35 trillion according to Bank of America. Significant deals included Commonwealth Bank of Australia's 5-year bond, which priced at the tightest-ever spread for a 5-year USD senior bond issued by an Australian bank in USD according to Citi. Oracle's $18 billion multi-tranche issuance was a major market event, with high demand and bonds rallying post-issuance.

The Euro market saw €83 billion in IG issuance, with 37% from financials, including strong demand for bonds from banks like Nordea and Belfius. Notably, ABN Amro continued their successful issuance programme under the new harmonised EU Green Bond framework. European SSA issuance included an inaugural deal from the Australian State of Victoria, which drew €17 billion in demand for a €2 billion deal, and a €5 billion climate bond from the European Investment Bank, both performing well post-issuance. Other significant deals came from the European Union, Italy, and Portugal.

Since mid-April 2025, Coolabah has been actively positioned to capitalise on a relatively stable economic and geopolitical regime characterised by robust performance across equity and bond markets.

In September, Coolabah's strategies consequently outperformed major indices, led by the A-rated, daily liquidity, 5.9-year-duration Pacific Coolabah Global Active Credit UCITS Fund, which returned 1.41% net of fees compared to the Bloomberg Global Aggregate Corporate Index's 1.17%. Over the past 12 months, this strategy has beaten the index by 1.21% after all fees. The Australian version of this solution, the Coolabah Active Global Bond Fund, returned 1.29% after fees.

The recently launched A-rated, daily liquidity Pacific Coolabah Credit Alpha UCITS Fund, which is hedged to zero duration, also delivered strong returns in September, climbing 0.87% after all fees.

In Australia, the A+ rated, daily liquid, zero-duration Long Short Opportunities Fund returned 0.81% net, similar to the performance of Coolabah's other A+ rated, daily liquid, zero-duration strategies, including the Global Floating-Rate High Yield Fund or YLDX (0.79% net), the Floating-Rate High Yield Fund (0.77%-0.79% net), and the Long Short Credit Fund (0.69% net).

Over the past year, the Long Short Opportunities Fund has returned 8.6% net, closely followed by the Long Short Credit Fund (7.8%-8.1% net) and the Floating-Rate High Yield Fund (7.5%-7.7% net).

While yields have declined somewhat, they remain high by recent historical standards and well above the RBA's 3.6% cash rate. Although credit spreads have tightened sharply, this dynamic needs to be juxtaposed against a widening of term premia for sovereigns.

In the post-2008 period, term premia—measuring the difference between short- and long-term risk-free government bond yields—were often non-existent or negative. Today, they are demonstrably positive in many markets as investors fret about a tsunami of public debt issuance.

By contrast, many corporate balance sheets have strengthened as firms have built up cash and de-levered. There has, in effect, been a risk transfer in credit spread terms from corporate to public balance sheets following the pandemic. Rising term premia therefore need to be weighed against tighter corporate credit spreads.

Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)

Strategy commentary cont'd:

Note that past performance is no guide to future returns and investors should read the product PDS to better understand risks and consult an independent adviser.

Initial tariff impacts on world trade/inflation

The US government is still introducing new tariffs, but the highest effective US tariff rates in decades has fallen short of announced tariff rates to date because of:

  1. Government exemptions and corporate deals;
  2. US firms substituting away from high-priced goods to cheaper alternatives; and
  3. China likely rerouting some sales to the US through lower-tariff Asian countries, even though rerouting is meant to attract a 40% penalty tariff.

US tariffs have slowed world trade and dramatically changed trade flows, but the saving grace has been the lack of retaliation by other countries. The profound shift in US trade policy should unwind globalisation, leading to less efficient production and higher costs, where Brexit suggests the structural shift will take several years.

There is no clear sign of a disinflationary impulse from US tariffs to the rest of the world via weaker world growth and/or China dumping goods meant for the US market. World export prices have risen and Chinese export prices are little changed, although a weaker USD has made China more competitive.

Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)

Strategy commentary cont'd: Goods prices are actually rising at the retail level in many countries, partly because of recent rises in import prices. There are no broad-based supply disruptions, but some multinationals could be evening out the cost of US tariffs by globally raising prices.

Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)

Strategy commentary cont'd: High AUS Q3 underlying inflation - RBA on hold into next year

Trimmed mean inflation looks like it will print well above the RBA's forecast for Q3, such that a rate cut this year looks unlikely barring a sudden rise in unemployment and/or a significant left-field shock from overseas.

The RBA is forecasting a 0.6% increase in the trimmed mean CPI in Q3, where Governor Bullock recently said that the RBA could still cut in November if inflation printed at either 0.7% or 0.8%, depending on the detail of the CPI and assuming that the staff still forecast inflation would return to the 2.5% target.

Coolabah expects a high 1.0% increase in the trimmed mean CPI for Q3. The 1.0% estimate is still a forecast given that the CPI components for the final month of the quarter are estimated and since the monthly CPI indicator is an incomplete version of the quarter CPI, If correct, a 1.0% increase for the trimmed mean CPI would follow a 0.7% increase in Q1 and a rise of 0.6% in Q2 and would be the largest increase since the start of 2024.

Such an outcome would put the RBA on hold into next year until it could judge whether higher inflation in Q3 was temporary, where the ABS will soon start publishing the full monthly CPI - which is closely aligned to the quarterly release according to the ABS - with October data, together with a short history, due in November.

Unless it proves temporary, a high outcome for Q3 could also cause the RBA to question its optimistic views on both a lower neutral policy rate and a lower NAIRU.

Small fall in ADP payrolls in Sep

The White House has shut down the government in a dispute over the budget and if the shutdown persists, the official payrolls report will not be released because it does not fall into the category of an essential government service.

Payrolls have broadly stalled over recent months and the private-sector ADP employment report showed a marginal decline of less than 0.1% in September after a downwardly-revised flat outcome in August.

Much of this weakness was due to the benchmarking of the ADP employment report to the official QCEW payrolls survey, which is practically a census of all American firms.

ADP noted that this benchmarking was less precise than usual because "[the latest] QCEW [survey] contained a higher-than-normal number of missing or redacted values for establishment size by [industry] sector and geography subgroups".

On economic statistics, the Bureau of Economic Analysis - which publishes the core PCE deflator and GDP as part of the national accounts - continues to add to the list of economic indicators that it no longer publishes or has suspended because of budget cuts. This echoes the more severe cutbacks in key environmental and health data by other US government agencies.

On the Fed, the Supreme Court was due to decide whether Fed Governor Cook could be stood down until a ruling is made on whether President Trump can fire her. The court has said that it will now decide on her future in January, which means she will continue to work at the Fed until then.

A January decision would precede the Board of Governors vote on recertifying the regional Fed presidents in February, where the White House plans to block at some of them from sitting on the FOMC. The legislation is not clear whether a regional Fed president can be blocked by just one governor or if it needs to be a majority decision.

Also on the Supreme Court, it will decide on the government appeal against the (Federal) Court of International Trade ruling that most of the new tariffs were illegal - ie, they had no grounding in matters of national security - in November. If the tariffs are struck down, it is not clear whether the government has properly-legislated tariffs waiting in the wings.

Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)

Strategy commentary cont'd:

EA inflation in line with ECB forecasts in Sep

Euro area core inflation tracked in line with the ECB's forecast in September, suggesting the ECB can continue to sit tight on rates, although with tentative signs of a deterioration.

Annual core inflation was 2.3% in Q3, down from 2.4% in Q2 and in line with the ECB's latest quarterly forecast.

The ECB is forecasting a further gradual improvement in inflation into next year, although the monthly profile of the data tentatively suggests that there is some risk that the improvement takes longer.

That is, on our seasonal adjustment, the core CPI rose by 0.2% in September for the fourth month in a row, but the trend annualised monthly inflation rate has edged up from a recent low of 2.25% to 2.5%, above the annual inflation rate of 2.3%, where the latter almost rounded up to 2.4%.

Core goods prices continue to rise, up 0.9% for the ninth month in a row, with trend annualised monthly inflation running at just over 1%, above the annual inflation rate of 0.8%. By way of comparison, annual inflation was running at about 0.5% prior to COVID. Core goods inflation is rising in the larger advanced economies, increasing strongly in Japan and picking up in the US, euro area and the UK.

Services prices rose by another 0.3% in the month, with trend annualised monthly inflation steady at 3.25%. Annual inflation was again steady at 3.2%, above its pre-COVID rate of around 1.75%. Services inflation has improved in most countries, but is still above pre-pandemic levels.

Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)

Strategy commentary cont'd:

Fund: Coolabah Long-Short Credit PIE Fund
Return/Risk: 7.23% pa net (2.98% pa volatility)
Performance Disclaimer:
This Publication is provided by Coolabah Capital Investments (Retail) Pty Limited (Coolabah) in good faith and is designed as a summary to accompany the Product Disclosure Statement for the Coolabah Investment Funds (Scheme) and the Coolabah Short Term Income PIE Fund and Coolabah Long-Short Credit PIE Fund (Funds). The Product Disclosure Statement is available from Coolabah, or the issuer Implemented Investment Solutions Limited (IIS), and on https://disclose-register.companiesoffice.govt.nz/. The information contained in this Publication is not an offer of units in the Funds or a proposal or an invitation to make an offer to sell, or a recommendation to subscribe for or purchase, any units in the Fund. Any person wishing to apply for units in the Funds must complete the application form which is available from Coolabah or IIS. The information and any opinions in this Publication are based on sources that Coolabah believes are reliable and accurate. Coolabah, its directors, officers and employees make no representations or warranties of any kind as to the accuracy or completeness of the information contained in this Publication and disclaim liability for any loss, damage, cost or expense that may arise from any reliance on the information or any opinions, conclusions or recommendations contained in it, whether that loss or damage is caused by any fault or negligence on the part of Coolabah, or otherwise, except for any statutory liability which cannot be excluded. All opinions reflect Coolabah’s judgment on the date of this Publication and are subject to change without notice. This disclaimer extends to IIS, and any entity that may distribute this Publication. The information in this Publication is not intended to be financial advice for the purposes of the Financial Markets Conduct Act 2013 (FMC Act), as amended by the Financial Services Legislation Amendment Act 2019 (FSLAA). In particular, in preparing this document, Coolabah did not take into account the investment objectives, financial situation and particular needs of any particular person. Professional investment advice from an appropriately qualified adviser should be taken before making any investment. Past performance is not necessarily indicative of future performance, unit prices may go down as well as up and an investor in the fund may not recover the full amount the capital that they invest. Returns are shown after fees, but before taxes, and are in New Zealand Dollars unless otherwise stated. The Funds aim to meet their respective objectives by holding units in Australian registered managed investment schemes or unit trusts (Underlying Funds). Equity Trustees Ltd (AFSL 240975) is the Responsible Entity for the Underlying Funds and Coolabah is the investment manager. Equity Trustees Ltd is a subsidiary of EQT Holdings Limited (ACN 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX: EQT). No part of this document may be reproduced without the permission of Coolabah or IIS. IIS is the issuer and manager of the Scheme. Coolabah is the investment manager of the Scheme.
Ratings Disclaimer:
MSCI Disclaimer: Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent.