Performance Report

December 2025

Fund: Coolabah Floating-Rate High Yield PIE Fund

Strategy: Floating-Rate High Yield

Return (since Dec. 2023): 7.64% pa net

Net return volatility (since Dec. 2023): 1.30% pa

Objective: The Fund aims to provide investors with exposure to a portfolio of investment-grade Australian floating-rate notes with enhanced yields

Strategy: The Fund focusses on generating higher income than other traditional fixed income investments by investing in a portfolio of investment-grade Australian floating rate notes and enhancing the yields (or interest-rate) through the use of gearing (or leverage). It achieves this by holding units in the Coolabah Floating-Rate High Yield Fund (FRHY) fully hedged to New Zealand dollars. FRHY predominantly invests in a portfolio of cash securities and investment grade floating-rate, Australian bank-issued senior and tier 2 bonds. FRHY cannot invest in hybrid securities, equities or property. FRHY will borrow or use leverage to provide additional exposure to these assets. Leverage can amplify gains and also amplify losses.

Period Ending 2025-12-31	Net Return	AusBond Credit FRN Index*	Net Excess Return^‡
1 month	0.29%	0.26%	0.04%
3 months	0.73%	0.76%	-0.03%
6 months	3.15%	1.96%	1.19%
1 year	5.76%	4.30%	1.46%
2 years pa	7.44%	5.42%	2.02%
Inception pa Dec. 2023	7.64%	5.47%	2.17%
Underlying FRHY Strategy*
3 years pa	9.70%	5.75%	3.95%
Inception pa Dec. 2022	9.84%	5.72%	4.11%

* 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. ^‡ The Excess Return columns represent the gross and net return above the AusBond Credit FRN 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 levered value of the underlying fund hedged to NZD*
Av. Portfolio Credit Rating	A+	Modified Interest Rate Duration	0.35 years
Portfolio MSCI ESG Rating	AA	Gearing Permitted?	Yes
No. Cash Accounts	15	Gross Portfolio Weight to AT1 Hybrids	0.0%
No. Notes and Bonds	104	Gross Cash Accounts + RBA Repo-Eligible Debt	76.5%
Av. Interest Rate (Gross Running Yield)	4.97%	Net Annual Volatility (since incep.)	1.30%

Underlying Strategy Ratings: Superior - Complex (Foresight Analytics); Recommended (Zenith)

Fund: Coolabah Floating-Rate High Yield PIE Fund

Return/Risk: 7.64% pa net (1.30% pa volatility)

The since inception net return of 7.64% pa net is the total annual return earned by the fund since Dec. 2023, 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 Floating-Rate High Yield 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 1.30% pa is based on the standard deviation of net daily returns since inception, which are then annualised, attributable to the Coolabah Floating-Rate High Yield PIE Fund.

Portfolio Managers

Christopher Joye, Ashley Kabel, Roger Douglas, Fionn O'Leary (Coolabah Capital Investments)

Fund Inception	6-Dec-2023	Distributions	Quarterly
Asset-Class	Levered Floating-Rate Notes	Target Return	8% - 9% pa yield
Min. Investment	NZD$1,000	Withdrawals	Daily Requests (funds normally in 4 days)
Buy/Sell Spread	0.00%/0.050%	Investment Manager	Coolabah Capital Investments (Retail)
Supervisor	Public Trust	Manager	FundRock NZ
Mgt. & Admin Fee	1.00% pa	Perf. Fee	Not Applicable

Fund: Coolabah Floating-Rate High Yield PIE Fund

Return/Risk: 7.64% pa net (1.30% 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 December, the zero-duration daily liquidity Floating-Rate High Yield PIE Fund (NZYLDP) returned 0.29% net, outperforming the AusBond Bank Bill Index* (0.20%), the RBNZ Overnight Cash Rate (0.20%), and the AusBond Credit FRN Index* (0.26%). Over the previous 12 months, NZYLDP returned 5.76% net, outperforming the RBNZ Overnight Cash Rate (3.26%), the AusBond Bank Bill Index* (3.29%), and the AusBond Credit FRN Index* (4.30%). NZYLDP ended December with a running yield of 4.97% pa, a weighted-average credit rating of A+, and a portfolio weighted average MSCI ESG rating of AA.

Since the inception of NZYLDP 2.1 years ago in December 2023, it has returned 7.64% pa net, outperforming the RBNZ Overnight Cash Rate (4.29% pa), the AusBond Bank Bill Index* (4.33% pa), and the AusBond Credit FRN Index* (5.47% pa). Since inception, NZYLDP's Sharpe Ratio, which measures risk-adjusted returns, has been 2.58x net. While NZYLDP's return volatility since inception has been low at around 1.30% 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: In the month of December, there was a secular shift in interest rate expectations marked by a bull steepening in many global yield curves, whereby short-term interest rates declined while long-term rates climbed. This reflected several cross-currents, including the US Federal Reserve continuing to ease its policy rate lower, combined with investor anxiety about deteriorating budget deficits, ever-growing government bond issuance, and the specter of inflation rates not mean-reverting sustainably to central bank targets, amongst other things.

Coolabah’s main macro ideas for 2026 are best summarized as follows:

We believe in US economic and strategic exceptionalism and that the short- and medium-term efficacy of President Donald Trump’s fiscal, trade, and geopolitical policies have been consistently underestimated by markets;

We believe that the US economy will surprise with its strength in the years ahead, underpinned by the AI capex boom, reshoring of supply chains, a manufacturing renaissance, aggressive deregulation, reinvigorated entrepreneurial activity, political policy clarity, and renewed public support for business-friendly outcomes given the success of Texas and Florida juxtaposed against California and New York;

We believe that the political zeitgeist globally remains focused on public spending in the name of winning short-term votes irrespective of the enduring fiscal consequences, which creates material inflation and interest rate risks in the period ahead;

We believe that the AI revolution is more likely to be inflationary rather than disinflationary in the near-term as a consequence of resource bottlenecks, understated capex spending competition, and the likelihood that AI will generate positive rather than negative net employment demand over the next 1-2 years;

We believe that the monetary policy easing cycle has run its course and that the risk of interest rate increases in 2026 and 2027 has been underestimated by markets, although a recent reassessment has taken place;

We believe that government bond term premia and the long-term cost of capital are likely to remain elevated and could drift materially higher in an environment where the US economy expands at a faster-than-expected pace (and other nation-states eventually seek to emulate its policy posture);

We believe that the probability of stronger-than-anticipated economic outcomes is likely ahead of the midterm elections in the US;

We believe that risk premia have shifted from corporate to public sector balance sheets, which is why credit spreads have compressed while term premia and long-term risk-free rates have increased;

Fund: Coolabah Floating-Rate High Yield PIE Fund

Return/Risk: 7.64% pa net (1.30% pa volatility)

Strategy commentary cont'd:

We reckon the US de-dollarization dynamic is a short-term phenomenon and re-dollarization will eventually become a new normal once Trump’s policies are better understood;

We believe that the geopolitical environment is being overhauled by the "America First" mantra, which is predicated on a realpolitik logic that prizes unilateral actions to protect American (and capitalist) interests ahead of failed Western liberal-democratic virtue signalling that hoped to incentivize responsible behaviors from non-democratic actors, which has never played out in practice; and

We believe that there are many latent inefficiencies in global bond markets that Coolabah is uniquely positioned to capitalize on.

In 2025, Coolabah traded AUD$129bn of bonds and CDS (USD$82bn). This was split by approximately A$71bn of credit trades combined with A$57bn of government and sub-sovereign trades.

In December, 10-year government bond yields rose around the world, led by Japan (+26bps), Australia (+23bps), Germany (+17bps), New Zealand (+15bps), France (+16bps), Italy (+15bps), and the US (+15bps). There were more modest moves in the UK, where 10-year gilt yields appreciated only 4bps.

A seasonal dip in new financial and corporate bond issuance, coupled with higher risk-free rates, helped physical and synthetic credit spreads perform in December. In derivative markets, the benchmark US and European investment-grade credit default swap indices, known as CDX IG and Main, compressed by 1.1bps and 2.1bps, respectively. This was echoed by the US and European high-yield indices, denoted by CDX HY and Xover, which also moved 6bps and 11bps tighter in the month.

In physical (or cash) bonds, investment-grade credit spreads across the US, UK, and European markets similarly drifted 3bps tighter in December. French and Italian government bond spreads to Bunds, which are another risk proxy, also contracted by about 1bp over the month.

In the Antipodes, spread moves were mixed: whereas benchmark 5-year Aussie major bank senior bond spreads climbed 2bps in December, subordinated major bank bond spreads declined 2bps. In the retail-centric ASX-listed hybrid market, 5-year major bank hybrid spreads plunged from 207bps to 171bps over the quarterly bank bill swap rate, albeit on diminishing turnover. This was a seasonally predictable dynamic amplified by scarcity into year-end as bank-issued hybrids are phased out by the regulator.

December USD IG issuance slowed sharply from November to US$38bn (YTD US$1.69trn), with muted supply across both financials and corporates. Coolabah selectively participated in attractively priced transactions, notably ANZ’s 3-year FRN, multiple tranches of Merck’s US$7.25bn multi-tranche deal, and S&P Global’s 5-year tranche. These transactions saw strong demand (approximately 5-7x covered) and post-pricing spread tightening.

In EUR investment-grade credit, supply rebounded to €17.5bn (approximately €9.5bn financials), compared with no issuance in December 2024. Despite seasonally light conditions, demand remained healthy, with deals averaging a 2.6x subscription rate. The standout transaction was Goldman Sachs’ dual-tranche HoldCo deal, which was well received following a long absence from the EUR market, complemented by solid demand for issues from BFCM and Deutsche Bank.

The rates sell-off hurt the performance of long-duration, or fixed-rate, bond indices. In USD, the Bloomberg Global Aggregate Corporate Index lost 0.10% in December as higher yields taxed fixed-rate bond prices. In contrast, the interest rate-hedged version of this index performed robustly, gaining 0.64%.

Given the relatively aggressive rise in Aussie government bond yields, the AusBond Composite Bond Index underperformed its Global Aggregate equivalent, losing 0.63% in December. The duration-hedged AusBond Floating-Rate Note Index performed better, offering a 0.37% return in the month.

Fund: Coolabah Floating-Rate High Yield PIE Fund

Return/Risk: 7.64% pa net (1.30% pa volatility)

Strategy commentary cont'd: Other risk markets were mixed. In the US, equities struggled to generate positive total returns: the S&P 500 was unchanged (0.06%) while the Nasdaq lost 0.67%. Japanese equities also lost ground, with the Nikkei 225 falling 0.37%. Other equity markets fared better, led by the UK (FTSE 100 up 2.26%), Europe (Euro Stoxx 50 up 2.25%), Australia (ASX 200 up 1.30%), and New Zealand (NZX 50 up 0.44%).

Brent Crude oil prices declined 3.72% in December, which is one disinflationary force in the global economy that could be accentuated by Trumpian interventions in Venezuela. That ultimate inflation hedge, gold, continued its record ascent, rising 1.89% over the month. Bitcoin’s slump persisted, dropping 3.59% to USD 87,648.

In 2025, there were several big market thematics, including the advent of the trade war, the AI revolution and related hyperscaler capex boom, the emergence of further Fed cuts, and then burgeoning investor insouciance with President Donald Trump’s otherwise radical economic and geopolitical ideas.

The trade-weighted US dollar depreciated by 7-8% as a result of de-dollarization diversification and the impact of the Fed’s cuts, although the damage was done in the first half of the year (in the second half, the trade-weighted USD index tracked sideways).

In bond markets, one of the best-performing assets in 2025 was global duration. The 5.9-year duration Bloomberg Global Aggregate Corporate Index returned between 6.62% (AUD) and 7.08% (USD). This exceeded the cash rate in AUD (3.88%) and USD (4.24%), and the duration-hedged version of the Global Aggregate Corporate benchmark, which returned between 5.47% (AUD) and 5.89% (USD).

In the Aussie market, both long-duration and floating-rate indices delivered inferior outcomes to their global counterparts: the 4.8-year duration AusBond Composite Bond Index returned only 3.17%, while the AusBond FRN Index rose 4.97%.

Coolabah’s best-performing strategies in 2025 were our long-duration funds benchmarked against the Bloomberg Global Aggregate Corporate Index. After fees, the Pacific Coolabah Global Active Credit Fund returned 7.82% in USD compared to the index’s 7.08%. The AUD version of this strategy, called the Coolabah Active Global Bond Fund, returned 7.28% net compared to the AUD index’s 6.62%.

Not far behind was Coolabah’s A+ rated, daily liquidity, and floating-rate Long Short Opportunities Fund, which returned 7.08% after fees. Similar strategies, like the Long Short Credit Fund and the Floating-Rate High Yield Fund, offered comparable outcomes. Please note that past performance is no guide to future returns and investors should read the fund's PDS to better understand its risks.

Fund: Coolabah Floating-Rate High Yield PIE Fund

Return/Risk: 7.64% pa net (1.30% pa volatility)

Strategy commentary cont'd:

Fund: Coolabah Floating-Rate High Yield PIE Fund

Return/Risk: 7.64% pa net (1.30% 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.