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October 2025
Fund: Coolabah Active Sovereign Bond Fund - Long Duration Class
Strategy: Government Bond
Return (since Dec. 2023): 7.12% pa gross (6.02% pa net)
Net return volatility (since Dec. 2023): 4.25% pa

Objective: The Active Sovereign Bond Fund - Long Duration Class targets returns in excess of its Benchmark, the Bloomberg AusBond Treasury 0+ Yr Index (BATY0) after management costs, by 3.0% to 5.0% per annum over rolling 3 year periods.

Strategy: The Fund aims to generate diversifying excess returns above the Benchmark for each Class through exploiting relative value mis-pricings in high quality government bonds and related Derivatives that have a low correlation to equity and credit markets and the level of interest rates. The Long Duration Class aims to deliver the Fund’s investment strategy over its Benchmark, the Bloomberg AusBond Treasury 0+ Yr Index (BATY0). It offers fixed-rate bond exposure by matching its interest rate duration to that of the Index, which may be a source of interest-rate risk.

Period Ending 2025-10-31Gross ReturnNet ReturnBloomberg AusBond Treasury 0+Yr IndexGross Excess Return†Net Excess Return†
1 month0.36%0.31%0.34%0.02%-0.03%
3 months1.38%1.03%0.67%0.72%0.37%
6 months4.60%3.77%1.23%3.37%2.54%
1 year9.62%8.25%5.87%3.74%2.38%
Inception pa Dec. 20237.12%6.02%4.55%2.58%1.47%

† The Excess Return column represents the gross and net return above the Bloomberg AusBond Treasury 0+ Yr Index

Disclaimer: Past performance does not assure future returns. Returns 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 AAA Modified Interest Rate Duration 5.2 yrs
Portfolio MSCI ESG Rating AA Gearing Permitted? Yes
No. Cash Accounts 12 Net Annual Volatility (since incep.) 4.25%
Gross Portfolio Weight to Govt. Bonds 95.0% Ratings: Recommended (Zenith)
Fund: Coolabah Active Sovereign Bond Fund - Long Duration Class
Return/Risk: 7.12% pa gross/6.02% pa net (4.25% pa volatility)

Disclaimer: Past performance does not assure future returns. Returns 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 gross (net) return of 7.12% pa gross (6.02% 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 Active Sovereign Bond Fund - Long Duration Class, with quarterly distributions reinvested. Investment return will vary depending upon investment date and any additional investments and withdrawals made. The annualised volatility estimate of 4.25% pa is based on the standard deviation of net daily returns since inception, which are then annualised, attributable to the Coolabah Active Sovereign Bond Fund - Long Duration Class.
Portfolio Managers Christopher Joye, Ashley Kabel, Roger Douglas, Matt Johnson (Coolabah Capital Investments)
APIR Code ETL5578AU Fund Inception 13-Dec-23
ISIN AU60ETL55786 Distributions Quarterly
Benchmark Bloomberg AusBond Treasury 0+Yr Index Unit Pricing Daily (earnings accrue daily)
Asset-Class Government Bond Mgt. & Admin Fee 0.65% pa
Target Return 3-5% pa above Benchmark after mgt. fee and costs Perf. Fee 20% of excess outperformance above the benchmark after mgt. fees
Investment Manager Coolabah Capital Investments (Retail) Custodian Citigroup
Fund: Coolabah Active Sovereign Bond Fund - Long Duration Class
Return/Risk: 7.12% pa gross/6.02% pa net (4.25% pa volatility)

Portfolio commentary: In October, Coolabah’s Active Sovereign Bond Strategy returned 0.36% gross (0.31% net) in a month characterised by turbulence as the market repriced both the FOMC and the RBA.

Over the last 12 months, the Strategy returned 9.62% gross (8.25% net), outperforming the Bloomberg AusBond Treasury Index (5.87%).

The month was beset by concerns about macro downside risks in the US and hot inflation in Australia. Macro downside-risks in the US emanated from the US Government shutdown, fears about a deterioration of the trading relationship with China (ahead of the 30th October meeting), and concerns that the Tricolor and First Brands bankruptcies were an early symptom of sharply declining credit quality. Hot Australian inflation caused the market to price out further RBA easing. The upshot was that the Australian yield curve was under strong flattening pressure in October.

Trump and Xi ultimately concluded a trade deal that calmed markets, and the FOMC delivered the 25bps rate cut in late-October that was universally expected. Fed commentary following their meeting was more hawkish than the market had expected. The upshot was that outright yields, once again, rose after the FOMC meeting. This tempered the flattening of the ACGB curve caused by hot inflation.

On the month, the strategy profited from long positions in the ~5-year sector and gave a little back on long positions in the ~9-year sector. Short positions in shorter-end bonds and paid OIS (to hedge stub risk) also contributed to strategy returns in the month. Overall, Coolabah ended with modest returns, approximately equal to the benchmark.

Bond-futures basis was a modest headwind in October, as it cheapened from rich levels. YM bond-futures basis cheapened ~0.4bps (from -0.5bps to -0.1bps); XM basis widened ~0.1bps (from -0.1 to ~0). We continue to judge that tight bond-futures basis reflects inflows into the ACGB market.

Strategy commentary: October was an interesting month characterised by cross-currents: a possible escalation of the US-China trade war supplanted by apparent détente; fears about the economic impacts of the US government shutdown superseded by a hawkish Fed; decent equity and bond market performance juxtaposed against declining cryptocurrencies; and, in Australia, unemployment spiking followed by a very hot third-quarter inflation print that ruled out near-term cuts.

One silver lining was a lot of bond issuance, or supply, which delivered opportunities. During the month, long-term fixed-rate bonds, or duration, were the best-performing asset class, with the Bloomberg Global Aggregate Corporate Index returning 0.61% (USD-hedged) relative to its duration-hedged equivalent, which returned 0.30%.

In Australia, the fixed-rate AusBond Composite Bond Index (+0.36%) only modestly outperformed the AusBond Floating-Rate Index (+0.33%) due to the shock of RBA rate cuts being shelved after the surprisingly high September-quarter inflation data (+1.0%), which printed in line with Coolabah's forecast (consensus was 0.8%). This meant that Aussie 10-year government bond yields were unchanged over the month, in striking contrast to the rest of the world where yields generally declined quite sharply.

For some time, our key macro ideas have been as follows: