Protecting Capital.
Powering Wealth.

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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The Fund delivered +1.06% in January and 13.69% over the past 12 months. Since inception, the Fund has continued to deliver its target of over 10% net return above the RBA cash rate, with an annualised return of 14.67% p.a.

Interpreting Credit Headlines in the Right Context

Recent months have seen continued media attention on developments across global credit markets. We are frequently asked how events offshore, or in other segments of lending, relate to our strategies.

The starting point is recognising that “credit” is not a single asset class. It is a broad collection of lending models that differ materially by geography, regulatory framework, borrower type, income mechanics and structural design. Outcomes in one segment do not automatically translate to another.

This is particularly important when interpreting global headlines. Credit markets operate within different legal environments, enforcement regimes and lending conventions. Borrower behaviour, collateral recoveries and restructuring processes can vary significantly across jurisdictions. These differences shape how risk is taken, how losses emerge and how investors are ultimately protected.

Equally, even within a single geography, the term “credit” now captures a wide spectrum of strategies, including non-investment grade corporate lending, construction and development finance, and structured asset-backed facilities, the latter being what our funds invest in. These are all fundamentally different forms of risk exposure, despite often being discussed interchangeably.

Credit Market Structure and the Fund’s Position Within It

Much of the stress reported in credit markets has been concentrated in segments characterised by concentrated exposures, borrower level dependency and valuation sensitivity. This is typical of mid-market corporate lending and construction or development finance, where outcomes are heavily influenced by refinancing conditions, asset values and borrower performance.

In non-investment grade corporate lending in particular, the underwriting framework is fundamentally a borrower cashflow assessment. Capital is typically provided to a single corporate borrower and repayment depends on the operating performance of that business. While security may be taken over assets, those assets do not themselves contractually generate the income used to service the loan. In that sense, repayment remains linked to enterprise value and cash generation at the borrower level.

Asset-backed securities/finance operates differently. A transaction is structured around pools of financial assets that themselves typically generate contractual cashflows which flow through the structure and service the funding. The performance of the assets, rather than the financial health of a single corporate borrower, drives repayment. Risk is managed at the structure level through eligibility criteria, performance triggers and cashflow controls that operate automatically as portfolio metrics change.

The distinction is structural rather than conceptual and these are fundamentally different lending structures which they behave differently through the cycle.

Where Complexity Actually Sits in Credit Markets

The structural distinctions outlined above do not only determine how risk is allocated within a transaction, they also shape how the transaction is executed in practice. Many credit transactions, particularly those involving tailored structures require extensive structural design and legal coordination before capital can be deployed. In these cases, risk is shaped not only by borrower performance or market conditions, but by how the transaction itself is constructed and implemented.

For highly structured strategies like the Manning Credit Opportunities Fund, execution is not simply the final stage of a deal. It is a central part of underwriting. Structure, documentation and cashflow mechanics determine how risk is allocated, controlled and priced, and are a key reason why transaction timelines are inherently nonlinear.

Execution Progression and Portfolio Activity

January saw continued growth in existing relationships, with two lenders drawing on their facilities during the month.

More significantly, two key transactions progressed through important due-diligence stages. These are transactions that have been in development for extended periods and involve multiple counterparties, negotiated structural protections and detailed legal architecture. In complex asset-backed transactions, this stage of progression is often the most consequential. Once structure and terms are substantially aligned, visibility on capital requirements and deployment timing increases materially, even if final settlement remains subject to execution processes. As these transactions continue to progress toward settlement and become operational within the portfolio, they may create a pathway for the Fund to selectively open to further applications, subject to final execution and deployment visibility. This remains consistent with the Fund’s longstanding approach of aligning capital raising with confirmed deployment rather than prospective opportunity.

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The Fund delivered +0.63% in January, 8.83% over 12 months and 9.31% 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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Interpreting Credit Headlines in the Right Context

Recent months have seen continued media attention on developments across global credit markets. We are frequently asked how events offshore, or in other segments of lending, relate to the Manning Monthly Income Fund.

The starting point is recognising that “credit” is not a single asset class. It is a broad collection of lending models that differ materially by geography, regulatory framework, borrower type, income mechanics and structural design. Outcomes in one segment do not automatically translate to another.

This is particularly important when interpreting global headlines. Credit markets operate within different legal environments, enforcement regimes and lending conventions. Borrower behaviour, collateral recoveries and restructuring processes can vary significantly across jurisdictions. These differences shape how risk is taken, how losses emerge and how investors are ultimately protected.

Equally, even within a single geography, the term “credit” now captures a wide spectrum of strategies, including non-investment grade corporate lending, construction and development finance, and structured asset-backed facilities, the latter being what the Manning Monthly Income Fund invests in. These are all fundamentally different forms of risk exposure, despite often being discussed interchangeably.

Credit Market Structure and the Fund’s Position Within It

Much of the stress reported in credit markets has been concentrated in segments characterised by concentrated exposures, borrower-level dependency and valuation sensitivity. This is typical of mid-market corporate lending and construction or development finance, where outcomes are heavily influenced by refinancing conditions, asset values and borrower performance.

In non-investment grade corporate lending in particular, the underwriting framework is fundamentally a borrower cashflow assessment. Capital is typically provided to a single corporate borrower, and repayment depends on the operating performance of that business. While security may be taken over assets, those assets do not themselves contractually generate the income used to service the loan. In that sense, repayment remains linked to enterprise value and cash generation at the borrower level.

Asset-backed securities/finance operate differently. A transaction is structured around pools of financial assets that themselves typically generate contractual cash flows, which flow through the structure and service the funding. The performance of the assets, rather than the financial health of a single corporate borrower, drives repayment. Risk is managed at the structure level through eligibility criteria, performance triggers and cashflow controls that operate automatically as portfolio metrics change.

The distinction is structural rather than conceptual, and these are fundamentally different lending structures that behave differently through the cycle.

We are increasingly seeing the term “asset-backed” applied to transactions where the underlying exposure is, in substance, corporate cashflow lending secured by assets. In these cases, repayment ultimately depends on the operating performance of a single business, even where assets are pledged as collateral. The assets may support recovery, but they are not the primary mechanism through which the funding is serviced.

In the Manning Monthly Income Fund, repayment is linked to the performance of an asset pool within a defined financing structure. Even where underlying loans may capitalise interest or amortise over time, the funding itself is supported by contractual payment waterfalls, performance triggers and credit enhancement mechanisms that govern how cash is generated, allocated and protected.

Understanding where repayment is structurally sourced, e.g. from borrower enterprise cashflow or from an asset pool operating within a defined structure, is central to assessing how risk is transmitted and managed.

Maintaining Credit Discipline

Current market conditions continue to reflect strong investor demand for income-focused strategies. In some parts of the market, this has resulted in tighter pricing, reduced covenant protection and pressure to maintain headline yield despite changing funding conditions.

In this environment, maintaining credit standards requires discipline. Protecting structure, diversification, and income quality can mean accepting slower deployment rather than compromising underwriting parameters.

As always, our emphasis remains on understanding how income is generated, how risk is absorbed and how structures behave when conditions change. Developments in other segments of the credit market do not alter these fundamentals, but they do reinforce the importance of distinguishing between very different lending models operating under a common label.

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