Fund Overview
An actively managed, conservative global fixed income solution that offers attractive US dollar cash-plus returns for limited additional risk aimed at conservative investors looking to diversify into a low-risk global income fund that targets Us dollar cash-plus returns from a diversified portfolio of actively managed global income-generating fixed interest assets OR as a building block within a balanced portfolio.
The investment objective of the portfolio is to provide returns in excess of the Overnight US Dollar SOFR (or other reference rate) over rolling 12-to-18-month periods, consisting of income with the opportunity for capital growth. The Fund’s primary source of return is income. The fund’s investment framework focusses on enhancing yield above that available from US dollar cash by investing in a combination of developed and emerging market investment-grade corporate credit.
The fund invests primarily in a broad range of global fixed income instruments that may include (amongst others) government and corporate bonds, and currencies from developed markets (DM) and emerging markets (EM) which may be denominated in any currency. The Fund invests flexibly across 80+ countries and 10+ asset classes–ensuring diverse sources of income and a smoother return profile.
Risk Profile – 2
On a scale of 1 to 7 with 1 being very conservative and 7 being very aggressive.
Key Characteristics & Positioning
1 Conservative global income fund aims for enhanced income, with limited capital growth.
2 Attractive income yield Aims to deliver US dollar cash +1.5% p.a. (gross) over rolling 12 months.
3 Low volatility with limited downside. The fund has a capital protection bias that aims to avoid annual drawdowns. Defensive assets offsetting riskier assets.
4 Actively managed High-conviction active management within defensive investment and fixed income asset class parameters.
5 The fund sits between low risk low return USD cash and high risk, high return global bonds
Current Asset Allocation (%) as of end Oct 2023.
Foreign Assets 100%
Bonds 51.8 (DM Credit, EM Credit and Gov Bonds)
Cash / Money Market 47.8
FX 0.4
Duration
Duration contribution (years) 1.1
This is a measure of risk for funds which invest in bonds as it predicts the sensitivity of the value of a fund’s portfolio given changes in interest rates. The higher the value (duration) the greater the volatility of the fund’s performance resulting from changes to interest rates.
Why we at InvestLife like it?
Historically developed market interest rates have been stuck close to zero and we believe this has changed fundamentally due to the shift in macro trends, developed market interest rates are expected to stay higher for longer.
Higher levels of inflation not seen in decades, a war in Europe that has led to a structural change in global supply chains, energy security concerns leading to a significant build-up of capital committed to green investment, a global pandemic that has structurally changed lifestyles and behaviours and a decrease in central bank balance sheets.
In response to some of these factors, we have seen central banks around the world adjust monetary policy to levels not seen since the GFC. Interest rates in the United States are now at 22-year highs and back at 5%.
The fund serves as a great alternative to USD cash with the sweetener of a further 1.5% without taking on an undue risk given the funds capital protection bias that aims to avoid annual drawdowns.
The Fund is also suited to pensioners looking for income consistency while still achieving inflation beating returns.
While it’s not sexy, it’s not meant to be. A solid investment is built on a strong foundation.
It’s crucial to thoroughly research the fund and, if needed, seek advice from financial experts to make informed decisions based on your financial goals and risk tolerance.
Feel free to reach out to us at InvestLife Advisory if you’re considering an investment.
