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The Manning Credit Opportunities Fund delivered +1.02% in April and 13.55% over the past 12 months. Since inception, the Fund has delivered an annualised return of 14.57%, continuing to exceed its objective of net returns of over 10% above the RBA cash rate.

Portfolio Evolution

Performance during the month was supported by continued activity across the portfolio, including further utilisation of existing facilities and the commencement of a recently settled transaction with a new lender relationship.

Three existing lenders drew additional funds during the month, reflecting ongoing growth within established counterparties and the continued deployment of capital into existing relationships. Alongside this activity, the Fund also continued working with several lenders on initiatives extending beyond their original financing arrangements, including support for new products and the progression of revised long term funding structures.

While new transaction origination often attracts the greatest attention, a significant portion of the Fund’s activity occurs after a facility has settled. As counterparties grow and mature, opportunities frequently emerge to increase facility sizes, support new initiatives and further strengthen transaction structures and investor protections.

Strengthening Existing Relationships

A key advantage of long term credit partnerships is the ability to participate in the ongoing evolution of a lender’s business. Over time, operational capabilities can improve, governance frameworks can become more sophisticated, technology platforms can be enhanced and funding structures can evolve. These developments often create opportunities to revisit transaction terms and further strengthen the overall credit profile of an exposure.

During the month, one existing facility was extended for a further two-year term following a comprehensive review of both the lender and the transaction structure. The revised arrangement incorporates a number of enhancements designed to support the lender’s continued growth while further strengthening structural protections within the facility.

This aspect of credit investing is often overlooked. While initial structuring and underwriting remain critical, some of the most attractive outcomes can arise from established relationships where familiarity, performance history and operational progress allow both parties to build upon an already successful foundation.

Activity and Opportunity

Transaction activity remains elevated across both existing relationships and prospective opportunities. In a market where transaction volume is increasing and funding conditions remain selective, the Fund continues to benefit from both new opportunity creation and the ongoing strengthening of existing relationships. While much attention is often placed on sourcing new transactions, we believe some of the most attractive risk adjusted outcomes can emerge from established counterparties that continue to improve operationally and strategically over time.

The portfolio continues to perform in line with expectations and we remain focused on disciplined deployment into opportunities where structure, control and pricing appropriately reflect the underlying risk profile of the transaction.

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The Manning Monthly Income Fund delivered +0.68% in April, 8.44% over 12 months and 9.20% annualised over three years. Since inception, the Fund has delivered an annualised return of 7.33%, continuing to exceed its objective of net returns of over 5% above the RBA cash rate.

10 Years of Disciplined Credit Investing

April marked a significant milestone for the Fund, reaching its 10-yeartrack record. Over the past decade, the Fund has delivered through a wide range of market conditions, including COVID-related dislocation, several major geopolitical conflicts and wars, the fastest interest rate tightening cycle in Australia in decades, inflationary pressure, liquidity shocks and periods of significant volatility across equity and fixed income markets. Throughout that time, the Fund has remained focused on the same objective: preserving investor capital while delivering a high and consistent level of income through disciplined, conservatively structured asset-backed credit exposures. Importantly, over its 10-yearhistory, the Fund has never experienced a negative monthly return from credit losses. We believe this consistency reflects the strength of the Fund’s disciplined underlying investment philosophy and unwavering focus on capital preservation through the cycle.

Policy Change, Inflation and Credit Markets

Recent months have seen an increasing focus on the interaction between fiscal policy, inflation and credit markets. The recent Federal Budget, evolving expectations around interest rates, and ongoing adjustments in property market conditions are all contributing to a more selective lending environment.

For credit investors, the relevance of these developments is less about predicting any single macroeconomic outcome and more about understanding how changing conditions influence borrower behaviour, refinancing dynamics and the quality of underlying collateral over time. Without taking a view on the policy itself, in periods when liquidity becomes more discerning, and policy settings evolve, differences in underwriting standards, portfolio construction, and structural protections tend to become increasingly important. Importantly, this does not imply broad deterioration across credit markets. Rather, it reinforces the distinction between lending exposures primarily supported by durable borrower cash flows and conservative collateral positions, and those more dependent on continued valuation growth, refinancing availability, or favourable market conditions.

As has already been written about extensively across financial markets following the Federal Budget, a number of proposed tax and housing policy changes may influence investor behaviour and financing markets over time. From 1 July 2027, the Government has proposed limiting negative gearing on residential property to new builds, while also replacing the current 50% capital gains tax discount with a system of cost base indexation and a minimum effective tax rate on capital gains. Whether implemented in their current form or not, these proposals are already contributing to a reassessment of long-term property investment assumptions and financing dynamics. At the same time, inflation remains above the RBA’s target range, with the cash rate increasing to 4.35% in May and trimmed mean inflation continuing to track above target. While inflation has moderated from peak levels, the adjustment process has been slower than many market participants initially expected. The practical implication for credit markets is that funding costs, borrower serviceability, and refinancing assumptions remain more important than they were during the low-rate environment of recent years.

Where Risk is Most Exposed

The transmission of these conditions through credit markets is uneven. Higher rates, changing tax settings and slower property market turnover do not affect all lending exposures equally. The impact depends on how the loan is repaid, how conservative the advance rate is, how quickly the exposure amortises and the extent to which repayment relies on refinancing, asset sales or valuation uplift.

In our view, this environment places greater emphasis on understanding where repayment is structurally sourced. Lending strategies reliant on single corporate borrower success/cash flow, project completion, development sales, residual stock realisations or high LVR refinancing assumptions can behave very differently once liquidity conditions become more selective. This is particularly relevant in construction and development finance, where repayment outcomes may depend heavily on future market conditions rather than existing borrower cashflows.

This is not a prediction of widespread stress across Australian property or credit markets. Australia continues to benefit from structural supports, including relatively low unemployment, population growth and a tightly regulated banking system. However, periods of adjustment tend to expose the difference between lending models that are structurally resilient and those more reliant on continued market momentum.

The Fund remains deliberately positioned away from any form of construction finance or development-related exposures. Within consumer lending, we also remain very cautious given ongoing pressure on household balance sheets and the cumulative impact of inflation and elevated interest rates.

The Fund currently holds over 78,000 individual asset exposures. In asset-backed credit, diversification is not a marketing point. It is a core risk mitigant. It reduces reliance on any single borrower, asset, or exit event and allows performance to be assessed through observable repayment behaviour across the pool.

Suddenly A Better Environment for Disciplined Capital

The opportunity set is also shifting. During much of last year and early this year, strong capital inflows into credit contributed to tighter pricing, weaker covenants and increasing pressure across parts of the market to maintain deployment. In some areas, this dynamic allowed borrowers and originators to negotiate terms that were significantly less favourable to funds/capital providers, particularly where managers faced strong inflows and limited capacity to hold elevated cash balances for extended periods. That dynamic is now changing. As funding markets become more selective and some participants pull back, we are seeing a greater number of attractive opportunities where stronger protections can be negotiated. This includes more conservative advance rates, tighter eligibility criteria, stronger arrears triggers, and more robust cashflow controls.

This is the environment in which alignment becomes increasingly important. A credit manager’s role is not simply to deploy capital. It is to determine when capital should be deployed, on what terms, and with what protections. In periods of abundant liquidity, the pressure to maintain deployment can lead to weaker structures and higher risk being transferred to investors. In more selective markets, patient capital can require more from lenders. For investors, this distinction is critical and becomes particularly important during periods where macroeconomic conditions, inflation, and policy settings are evolving simultaneously. Higher returns in credit should not come from accepting weaker protections or moving up the risk curve. They should come from being paid appropriately for risk, with structures that are designed to preserve capital if conditions deteriorate.

The Fund is currently in the later stages of progressing several larger transactions, which, if completed, are expected to further enhance overall portfolio quality and portfolio economics. Consistent with the nature of structured and asset-backed credit, these transactions involve detailed due diligence, legal negotiation and multi-party execution processes and therefore remain subject to completion risk until fully settled.

Positioned for the Current Environment

The Fund’s mandate provides flexibility to allocate across mortgage, business and consumer-backed exposures where we believe risk-adjusted returns are attractive. Importantly, that flexibility allows us to move away from sectors where risk is increasing and toward areas where collateral quality, borrower behaviour and structural protections remain more favourable.

As the broader market adjusts to a more selective lending environment, we believe the importance of conservative structuring, diversification and disciplined underwriting will continue to increase. The Fund remains focused on targeting a high level of income while preserving investor capital through selective deployment, active risk management and a consistent through-the-cycle investment approach.

The Manning Credit Opportunities Fund delivered +1.08% in March and 13.62% over the past 12 months. Since inception, the Fund has delivered an annualised return of 14.61%, continuing to exceed its objective of net returns of over 10% above the RBA cash rate.

Portfolio Performance

The portfolio continues to perform as intended, with underlying exposures tracking in line with their structural design. During the month, three existing lenders drew further funds under their facilities, reflecting continued utilisation across core relationships. Capital within the Fund is actively recycled, with repayments and redraws occurring on a continuous basis in line with agreed transaction structures. This dynamic is central to how the strategy operates. The portfolio is not static. It is actively managed through the ongoing deployment and return of capital, allowing the Fund to respond to changing opportunity while maintaining alignment with its return objectives.

Opportunity in Complexity

For some lenders, access to capital in more complex transactions is not simply a function of pricing. It is a function of whether funding providers can understand, structure and execute the transaction. In periods of increased uncertainty, this distinction becomes more pronounced. Capital tends to become more selective, timelines can extend and alternative funding options may narrow. In that environment, the value of a funding partner capable of navigating complexity and providing certainty of execution increases.

For the Fund, this is typically where the most compelling opportunities arise. Rather than competing in more commoditised areas of the market, the focus remains on transactions where complexity creates a barrier to entry and where structure, control and pricing can be directly negotiated.

Maintaining Selectivity

While the broader opportunity set remains active, the proportion of transactions that ultimately meet the Fund’s requirements remains limited. This reflects the nature of the strategy. Opportunities are not defined by volume, but by alignment with the Fund’s standards for structure, counterparty quality and risk-adjusted return. As a result, deployment continues to be selective, with a clear preference for transactions where the Fund can play a meaningful role and where execution capability provides a genuine advantage.

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The Manning Monthly Income Fund delivered +0.65% in March, 8.55% over 12 months and 9.24% annualised over three years. Since inception, the Fund has delivered an annualised return of 7.32%, continuing to exceed its objective of net returns of over 5% above the RBA cash rate.

Credit Markets and Capital Flows

As the year has progressed, the conversation around credit has shifted. Capital continues to flow into the asset class, and the Fund has experienced record inflows over recent months, reflecting a broader reallocation as investors respond to increased volatility and reassess risk across other parts of the market.

As this occurs, focus has increasingly turned to how returns are generated and how strategies are positioned. In periods like this, dispersion within credit tends to widen. Strategies that appear comparable at a headline level can behave quite differently once underlying structures and repayment dynamics are tested.

Volatility, Rates and the Importance of Consistency

Periods of equity market volatility and uncertainty around the path of interest rates tend to sharpen investors' focus on income generation, capital stability, and portfolio positioning. In that environment, consistency becomes more valuable.

Volatility serves as a reminder that while growth assets play an important role over the long term, they are inherently exposed to short-term shifts in sentiment and prices. By contrast, a consistent and predictable income stream can play a stabilising role within a portfolio. Over time, the compounding effect of steady monthly returns can be a meaningful contributor to overall outcomes, particularly where there is greater certainty around how capital is positioned and managed.

Portfolio Construction

For a strategy such as the Manning Monthly Income Fund, the objective has not changed. It is to deliver a high level of income on a monthly basis while targeting capital preservation through changing market conditions. This requires consistency in how capital is deployed, particularly as conditions become more competitive.

In more supportive environments, differences in underwriting, structure and counterparty selection can be masked by strong liquidity and stable refinancing conditions. As those conditions tighten, outcomes become more dependent on how exposures are constructed rather than how they are labelled.

For a defensive credit allocation, the objective is not to maximise short‑term returns. It is to deliver a high level of income with consistency while managing downside risk across a range of conditions. That requires clear visibility into how loans are repaid and how structures behave when performance weakens, rather than relying on asset values or continued access to liquidity.

Market Conditions

We are currently seeing a wide range of opportunities alongside increasing dispersion in how transactions are structured, priced and executed. In some parts of the market, strong inflows and more limited deployment opportunities are beginning to influence behaviour, with some managers being pushed towards larger or less-aligned transactions where visibility into underlying performance is reduced.

Deployment Discipline and Capacity Management

Our approach remains unchanged. We continue to focus on partnering with a select group of non‑bank lenders where we can be a meaningful, and in many cases, mission‑critical, funding provider. Maintaining this position allows for closer proximity to underlying assets and a clearer understanding of portfolio performance over time.

This is not always the fastest path to deployment. We manage capacity deliberately and deploy capital in line with transactions that meet our requirements, rather than allocating it just because it is available. At times, this results in higher cash balances in the short term, particularly when inflows remain strong, and transaction timelines extend. In our view, this is preferable to reallocating capital into opportunities that sit outside our core focus or where alignment is diluted.

Track Record and Current Portfolio Performance

Over time, consistency of approach has proven more valuable than responsiveness to short‑term conditions. While sources of uncertainty change, the underlying discipline does not.

As the Fund enters its eleventh year, this consistency is tangible. Over that period, the portfolio has navigated a range of market conditions without experiencing a negative month from credit losses. While past performance is not a predictor of future outcomes, it reflects how the Fund has been constructed and managed over time.

In the current environment, portfolio performance continues to track as expected, with exposures performing in line with their intended design. Broader market volatility is not, at this stage, translating into changes in borrower behaviour or credit performance within the Fund.

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The Manning Credit Opportunities Fund delivered +1.01% in February (noting the 28 day month, this is equivalent to 1.12% for a 31 day month) and 13.68% over the past 12 months. Since inception, the Fund has delivered an annualised return of 14.63%, continuing to exceed its objective of net returns of over 10% above the RBA cash rate.

Interpreting Macro Conditions Through a Credit Lens

The macroeconomic backdrop remains a central focus for investors, with ongoing debate around the path of inflation, the trajectory of interest rates and the broader implications of geopolitical developments.

These factors have contributed to periods of volatility across global markets, particularly within publicly traded credit. Spreads have moved wider (from historically tight levels) in response to shifting rate expectations, liquidity conditions and investor sentiment, often adjusting rapidly as new information is incorporated.

While highly responsive to macro inputs, this shift is less a reflection of a deterioration in underlying credit quality and more a repricing of uncertainty across rates, inflation and broader market conditions. While these dynamics are highly visible, their transmission into private and structured credit markets is less direct.

How Macro Conditions Flow Through Credit Markets

By contrast, private and structured credit transactions are negotiated, structured and executed over extended periods. Pricing is not reset continuously; instead, it is determined through bilateral or multi-party processes that reflect asset characteristics, structural protections, and counterparty requirements.

This distinction matters. It means that while macro conditions influence an opportunity, they do not translate one-for-one into existing exposures. Instead, they tend to manifest in new transaction pricing, structure, and availability, rather than in the immediate repricing of a portfolio.

Implications And Opportunity

Periods of macro uncertainty can create divergence across credit markets.

In more liquid and commoditised segments, increased volatility can compress activity or lead to short-term dislocations driven by sentiment rather than fundamentals. In more complex, less intermediated transactions, the effect is often different.

Lenders continue to require stable, long-term funding partners. Where capital becomes more selective or constrained, the ability to provide certainty of execution becomes more valuable. This can translate into improved structuring terms, stronger protections and more attractive pricing for investors able to underwrite complexity.

For the Credit Opportunities Fund, these conditions are typically where the most compelling opportunities arise — not through broad market movements, but through selective transactions in which structure, control, and pricing can be negotiated directly.

Discipline Through the Cycle

While the macro environment remains uncertain, our approach is unchanged.

We continue to focus on transactions where risk is clearly defined through structure, where cashflow generation is governed by contractual mechanisms, and where pricing appropriately reflects complexity and control.

As always, deployment remains selective. The objective is not to respond to short-term market movements, but to take advantage of conditions where they create structural opportunities consistent with the Fund’s return profile.

The portfolio continues to perform in line with expectations.

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The Manning Monthly Income Fund delivered +0.58% in February (noting the 28 day month, this is equivalent to 0.64% for a 31 day month), 8.73% over 12 months and 9.28% annualised over three years continuing to deliver over 5% net return above the RBA cash rate.

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The Fund is currently carrying a higher than targeted level of cash due to forthcoming transaction settlements. Typically, monthly fluctuations in returns are due to cash levels within the Fund.

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Geopolitics, Inflation and What Actually Matters

The macro backdrop has become noisier again. Recent conflict in the Middle East has pushed fuel prices higher, and the RBA has explicitly noted that, if sustained, higher fuel prices will add to inflation and that short term inflation expectations have already risen. At the same time, Australian inflation remains sticky, with CPI running at 3.8% in the 12 months to January and trimmed mean inflation at 3.4%. In response, the RBA has resumed tightening this year, on Tuesday lifting the cash rate to 4.10%.

For credit investors, there are two separate questions:

• The first is what these developments do to asset prices and market sentiment.
• The second is what they do to the actual cashflows that service debt.

The former tends to move quickly and dominate headlines. The latter is what ultimately determines repayment and capital outcomes.

Asset Prices vs Cashflows

The distinction is particularly relevant in the current environment. When inflation prints above expectations and rate expectations reprice, duration assets adjust immediately. Government bond yields move higher, credit spreads can widen, and mark to market losses are reflected in portfolios in real time. This is most visible in long duration fixed income strategies, where small moves in yields translate into meaningful price volatility.

This often leads to a feedback loop in investor behaviour. Negative mark to market performance drives sentiment, which in turn can force asset sales into weaker markets, further impacting pricing. In more liquid public markets this process can occur quickly. In less liquid strategies, valuation adjustments may lag but are ultimately driven by the same underlying repricing of discount rates and risk. Importantly, these moves are not necessarily a reflection of underlying credit deterioration. They are primarily a function of how assets are valued, rather than how they perform. A loan can continue to pay exactly as expected, while the market value of that exposure moves materially as discount rates change.

This is where the second question becomes more relevant. From a credit perspective, the key issue is whether the borrower continues to generate sufficient cashflow to meet its obligations, and how the structure responds if performance weakens. Inflation, higher rates and slower growth can all place pressure on borrowers, but the transmission of that pressure depends on how the exposure is structured.

For asset-backed credit in particular, the focus remains on the performance of large pools of underlying loans, rather than on any single borrower or asset valuation. Cashflows are generated by the underlying loan repayments and pass through the structure according to predefined rules. Structural features such as excess spread, subordination and performance triggers are designed to absorb variability in arrears and losses before they impact investor capital. In contrast, in parts of the market where returns are more closely linked to asset values, refinancing conditions or concentrated borrower performance, the same macro developments can have a more direct and immediate impact on outcomes. In practical terms, this is why periods of macro volatility can create a disconnect between headlines and underlying credit performance. Markets tend to focus on price movements and sentiment, while the more relevant question for credit investors remains unchanged: how is the loan being repaid, and what happens if it is not.

Through the Cycle

This is not a new dynamic.

Over the past decade, the Fund has operated through a wide range of market conditions, including periods of elevated geopolitical tension, dislocation during COVID, and more recently, the fastest interest rate tightening cycle in Australia in decades. Each period has been characterised by its own set of concerns, often dominating investor attention at the time. While the underlying drivers differ, the pattern is consistent. Market sentiment adjusts quickly, asset prices reprice, and the narrative shifts. What tends to matter over time is less the specific catalyst and more how exposures are structured to perform through those conditions.

From a portfolio perspective, this is where scenario analysis and stress testing become relevant. While outcomes are never certain, we typically assess how underlying exposures are expected to behave under a range of more challenging conditions, including higher rates, slower growth and elevated arrears. The focus is not on predicting any single scenario, but on understanding how cashflows, credit support and structural features interact if conditions deteriorate.

This approach is intended to provide resilience across cycles, rather than reliance on a particular macro outcome. In practice, periods of uncertainty tend to reinforce the same underlying principles - clarity on how loans are repaid, how risk is absorbed and how structures respond when performance weakens.

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