The Fund delivered +0.78% in April, 9.61% over 12 months and 9.19% annualised over three years continuing to deliver over 5% net return above the RBA cash rate.
In recent weeks, we have seen Australian credit spreads, being the expected return on a specific credit-rated note, fluctuate and largely move wider, reducing the value of those assets. For those funds that have benefitted over the prior years from credit spreads moving lower, inflating the value of their underlying assets, this has seen lower returns of late versus previous periods, adding a degree of volatility to a historically low volatility holding in one’s portfolio.
Short Duration Assets
The Manning Monthly Income Fund targets so called short duration assets that have a shorter investment period. These assets enable us to more actively manage the portfolio according to our macroeconomic views while being less impacted by changes in credit spreads due to the shorter timeframe of repayments that must be adjusted. As we have seen considerably more relative value in private vs public markets, the Fund's return has been derived by investing in higher-yielding assets that have adequate structural credit supports rather than being reliant upon lower credit spreads to drive returns higher.
Impact from Widening Credit Spreads
In April, the Fund delivered 0.78%, with credit spreads moving wider, slightly reducing the return by approximately 0.03% (i.e. without changes in market conditions, the return would have been 0.81%). While macroeconomic factors naturally influence the valuation of the Fund’s holdings, their impact remains modest, reinforcing the strength of the investment approach. The Fund’s focus on short-duration, floating-rate, higher-yielding private assets with structural credit support continues to demonstrate resilience and stability in varying market conditions.
