The Fund delivered +0.73% in August, 9.32% over 12 months and 9.35% annualised over three years continuing to deliver over 5% net return above the RBA cash rate.
Structure Before Return
In credit, capital protection is determined well before the first dollar is deployed. Every facility in the portfolio is structured with clear and measurable protections, for example: arrears and cumulative loss triggers that redirect cash to protect us, eligibility criteria that prevent an adverse drift in the underlying pool, and structural features that redirect excess income early when metrics weaken. These controls are not theoretical - they are enforceable tests that turn off originator distributions and accelerate deleveraging when our thresholds are breached.
Importantly, we focus not just on where we sit in the capital stack, but on the quality of the loans and the structure in which they're held. For example, a mezzanine position behind a major bank senior can often present a more resilient profile than a “senior” exposure with minimal first-loss protection and less robust assets. Bank funded facilities are typically larger and more diversified, with borrower interest rates low enough to attract higher quality credit profiles. They are governed by institutional standards, require comprehensive reporting, and usually embed sophisticated protections such as step-in rights, early-amortisation triggers and eligibility tests that can protect investors long before permanent impairment occurs.
The objective is not to own the highest-ranking piece for its own sake, but to position the Fund where risk is appropriately priced and where the structure and counterparties give us confidence that capital can be preserved through the cycle.
Listed Credit
Recent months have seen a resurgence of listed credit vehicle issuance, with managers introducing buybacks, NAV-support frameworks and other mechanisms aimed to address persistent discounts. These are welcome developments, provide retail investors with greater access and signal the broader maturation of the asset class. History shows, however, that listed debt instruments can trade at deep and prolonged discounts to NAV during market dislocations - as in 2020 and other periods - often driven by sentiment and secondary market liquidity rather than deterioration in underlying collateral. Whether these innovations will materially change investor behaviour when volatility returns remains to be seen. Price volatility is ultimately driven by market liquidity, not just vehicle design.
Filtering For Resilience and Consistency
A busy market brings opportunity, but not all opportunity is equal. With a track record of a decade, strong market relationships and both strategies sourcing transactions, we benefit from a consistently broad and diverse pipeline each week. This breadth allows us to filter aggressively - focusing on counterparties with robust balance sheets, loan books that meet our eligibility and seasoning standards, and transactions with structural features that are designed to preserve capital through stress. This filtering is critical as capital continues to flow into the market. It ensures we are deploying into assets where the return not only meets our target but is structured to be sustainable across a range of market environments.
While recent market conditions have been relatively benign, a range of fundamental shifts are underway in the economy that may not immediately translate into widespread asset stress but can create volatility as sentiment adjusts. Periods of market dislocation are often driven more by sentiment and liquidity than by deterioration in the underlying assets. Having an aligned and stable investor base allows us to lean into those opportunities rather than pull back. Over nearly 10 years, the Fund has navigated liquidity shocks, credit repricing, and central bank tightening without departing from its mandate - consistently delivering capital preservation and a high level of income for investors. We do not rely on mark-to-market gains or opportunistic timing - results reflect repeatable credit work and disciplined structure. That consistency remains our advantage in a competitive market.
