Performance Report

October 2025

Fund: Coolabah Global Floating-Rate High Yield Complex ETF

Strategy: Global Floating-Rate High Yield

Return (since Feb. 2025): 5.80% gross (4.99% net)

Net return volatility (since Feb. 2025): 1.93% pa

Objective: The investment objective of the Fund is to provide investors with exposure to a global floating-rate portfolio of investment-grade bonds and hybrid securities with enhanced yields.

Strategy: The Fund aims to generate higher income than other traditional fixed income investments by investing in a floating-rate portfolio of investment-grade bonds and hybrid securities issued predominately by global banks and enhancing the yields (or interest-rate) through the use of gearing (or leverage). It also has the capacity to invest in government bonds, corporate bonds and hybrid securities. The Fund aims to offer a floating-rate profile by targeting an interest rate duration risk of less than 3 months. The Fund can borrow and use derivatives, meaning the Fund is geared (or leveraged). Leverage can amplify gains and also amplify losses. The Fund does not invest in equities, unrated unlisted debt securities or property.

Period Ending 2025-10-31	Gross Return	Net Return	Bloomberg AusBond Credit FRN 0+ Yr Index	Gross Excess Return^‡	Net Excess Return^‡
1 month	0.48%	0.38%	0.33%	0.15%	0.06%
3 months	2.22%	1.94%	1.23%	0.99%	0.71%
6 months	5.95%	5.37%	2.70%	3.25%	2.67%
Inception Feb. 2025	5.80%	4.99%	3.43%	2.37%	1.56%

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+	Av. Interest Rate (Gross Running Yield)	6.08%
Portfolio MSCI ESG Rating	AA	Modified Interest Rate Duration	0.24 years
No. Cash Accounts	14	Gearing Permitted?	Yes
No. Notes and Bonds	148	Net Annual Volatility (since incep.)	1.93%

Fund: Coolabah Global Floating-Rate High Yield Complex ETF

Return/Risk: 5.80% gross/4.99% net (1.93% pa volatility)

Portfolio Managers

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

Ticker	YLDX	Fund Inception	17-Feb-2025
ISIN	AU0000380826	Distributions	Monthly
Asset-Class	Global Floating Rate	Unit Pricing	Daily (earnings accrue daily)
Target Objective	Yield focused	Min. Investment	AUD$1,000
Investment Manager	Coolabah Capital Investments (Retail)	Withdrawals	Daily requests (funds normally in 3 days)
Responsible Entity	Equity Trustees	Buy/Sell Spread	On exchange
Custodian	Citigroup	Mgt. & Admin Fee	1.00% pa

Fund: Coolabah Global Floating-Rate High Yield Complex ETF

Return/Risk: 5.80% gross/4.99% net (1.93% pa volatility)

Portfolio commentary: In October, the zero-duration daily liquidity Coolabah Global Floating-Rate High Yield Fund (YLDX) returned 0.48% gross (0.38% net), outperforming the AusBond Bank Bill Index (0.30%), the RBA Overnight Cash Rate (0.30%), and the AusBond Credit FRN Index (0.33%). Over the previous 6 months, YLDX returned 5.95% gross (5.37% net), outperforming the RBA Overnight Cash Rate (1.88%), the AusBond Bank Bill Index (1.89%), and the AusBond Credit FRN Index (2.70%). YLDX ended October with a running yield of 6.08% pa, a weighted-average credit rating of A+, and a portfolio weighted average MSCI ESG rating of AA.

Since the inception of YLDX in February 2025, it has returned 5.80% gross (4.99% net), outperforming the RBA Overnight Cash Rate (2.69%), the AusBond Bank Bill Index (2.74%), and the AusBond Credit FRN Index (3.43%). Since inception, YLDX's Sharpe Ratio, which measures risk-adjusted returns, has been 2.34x gross (1.73x net). While YLDX's return volatility since inception has been low at around 1.93% 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: 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:

Interest rate duration, or long-term risk-free rates, are cheap relative to most other assets as term premia have widened (reflecting elevated government bond issuance and concerns around fiscal policy integrity).

There has been a shift of risk premia from the private sector, where many credit spreads have tightened, to the public sector, where term premia have widened, leaving overall yields at historically attractive levels.

We are bullish on the potential for the US economy to deliver an upside economic surprise, courtesy of AI-related capex and additional investments associated with the reshoring of US supply chains, amplified by a very business-friendly administration.

Markets have been too insensitive to the possibility of shallow easing cycles and the prospect of interest rate hikes coming back onto the table in 2026-28.

The main concern is globally sticky services inflation, in concert with a rebound in goods prices that makes it difficult for central banks to hit their inflation targets.

The main mitigant to renewed rate hikes is the deflationary influence of AI reshaping workplaces (e.g., Tesla robots disintermediating labour).

Fund: Coolabah Global Floating-Rate High Yield Complex ETF

Return/Risk: 5.80% gross/4.99% net (1.93% pa volatility)

Strategy commentary cont'd: October saw strong equity market performance globally, accompanied by a rally in global risk-free rates. The S&P 500 gained 2.3%, while the Nasdaq rose 4.8%. In Europe, major indices also finished higher, with the Eurostoxx 50 up 2.5% and the FTSE 100 advancing 4.1%. Gold ended the month up 3.7% at $4,000, though this remained about 10% below intra-month highs of $4,400. Equity gains were led by technology stocks, with the tech component of the S&P 500 up 6.2% for the month.

Fixed income markets ended the month on a softer tone after a strong rally in the first three weeks. Concerns over a weakening US labour market, coupled with the ongoing shutdown of the US Federal Government, were to the fore early in the month. On 22 October, the US 10-year yield reached a low of 3.94%, subsequently closing the month at 4.08%, still 7bps richer than 30 September levels. Credit markets were mixed, with European IG credit spreads 2bps tighter at 75bps, whereas US IG credit spreads finished the month 5bps wider at 78bps.

The US saw $161bn of USD investment-grade issuance in October — the busiest October in over a decade — bringing YTD supply to $1.51trn, according to Bank of America. Financials represented 36% of total supply, below the YTD average of 47%. Following mid-month earnings, Goldman Sachs, JPMorgan, and Morgan Stanley each issued new USD benchmark deals.

The standout transaction came from Meta, which launched a $30bn multi-tranche deal. According to Bloomberg, "Meta's ~$125bn peak order book was the largest on record, surpassing CVS's $120bn for its $40bn Aetna acquisition in 2018." This was also the largest corporate bond issue since Pfizer's $31bn Seagen acquisition financing in May 2023. Demand was strong, with each tranche around 4x oversubscribed.

We participated in the 5-year, 10-year, 30-year, and 40-year tranches. The bonds were volatile on the break, moving up to 4bps intraday, and ended slightly tighter: the 5Y, 30Y, and 40Y closed around RO-0.5bps, and the 10Y around RO-2bps.

In contrast, European primary issuance was subdued, totalling just €53.9bn, including €24.3bn from financials. The slowdown reflected front-loaded issuance in September and blackout periods ahead of earnings for many banks.

After results, reverse Yankee issuance resumed as Citi, Bank of America, and JPMorgan took advantage of the favourable cross-currency basis. Among European banks, Barclays issued €1.25bn of 11NC10 HoldCo debt late in the month, attracting 4.2x covered books.

European corporate supply was minimal, with Procter & Gamble's dual-tranche 8-year and 20-year issue being the only notable deal.

In the sovereign, supranational, and agency (SSA) sector, the European Union tapped an existing 7-year bond and issued a new 15-year line, together raising €11bn.

In Australia, spreads were volatile across the capital stack. While the major banks' 5-year senior spreads were very marginally wider, their Tier 2 bond spreads at the 5-year maturity point moved materially tighter by some 10bps. One notch down, the majors' 5-year AT1 hybrid spreads drifted 3bps higher.

We saw A$9.2bn of public IG primary credit issuance in AUD from domestic and global issuers. Deals of note included: CBA issued A$350m of an unusual 10-year SNR in a club deal, which we participated in. The deal priced at ASW+100bps. This was an unusual deal, as 10-year SNR is historically not a common format for domestic financial issuers outside of the occasional private deal.

NAB followed up with their own SNR deal after the success of CBA's experiment, and issued their own 10-year along with a more traditional 3-year FXD and FRN. They printed A$1bn of the 10-year SNR at ASW+103bps, A$350m of the 3-year FXD at ASW+60bps, and A$1.65bn of the 3-year FRN at BBSW+60bps. We participated in all tranches.

We also saw other smaller deals from Victorian Power Networks (A$850m dual FXD/FRN), Patrick Terminals (A$600m dual FXD/FRN), Credit Union Australia (A$500m), Ampol (A$500m), Lendlease (A$450m), Dominion (A$425m), Weir Group (A$400m), and Stockland (A$400m), which we did not participate in.