The Fund delivered +1.20% in December, 13.83% over 12 months and 14.70% annualised since inception, continuing to deliver over 10% net return above the RBA cash rate.
Over recent months, a common question from investors and advisers has been around timing: when the Fund may reopen and how that relates to the transaction pipeline we are working through. It is worth reiterating how capacity is created in this asset class and why visibility on the pipeline does not translate directly into deployable capital.
MCOF is designed as a high target return credit strategy, and the relationship between capital raised and capital deployed is central to outcomes. With a target of RBA Cash +10% net of fees, holding excess cash for extended periods has a direct and measurable impact on returns. For that reason, capital is raised with reference to confirmed or near-term deployment opportunities, rather than on a continuous basis.
Execution in this market is inherently nonlinear. Facilities typically involve multiple counterparties, detailed documentation, covenant negotiation, and, in some cases, securitisation mechanics. Timelines can compress or extend as these processes evolve, particularly over the summer period.
This approach is deliberate. It reflects a preference to align capital raising with deployment, rather than reopening the Fund prematurely and carrying cash while transactions progress.
At any given time, the Fund is engaged in multiple transactions at different stages of development. Some facilities are in late stage execution, where documentation is substantially agreed and settlement timing is becoming clearer. Others are in advanced diligence, often involving complex business models and capital structures or multiparty arrangements that require extensive legal, operational and credit work before sizing and terms are finalised. We may also be engaged in earlier stage discussions where there is alignment in principle with a lender, but where capital requirements, structure or timing remain fluid.
Importantly, even once terms are agreed, the path to funding is rarely linear. Facility sizes can change, drawdown schedules can move, and in some cases, transactions do not proceed. This is not a reflection of execution risk so much as the reality of underwriting bespoke, asset-backed credit facilities where multiple counterparties, business structures and risk considerations intersect.
For this reason, we do not manage Fund capacity based solely on the indicative pipeline. Capacity is created when there is sufficient certainty around both the quantum and timing of capital deployment. Opening the Fund prematurely based on prospective transactions risks holding idle cash for extended periods, which is inconsistent with the Fund’s return objective and with our alignment as investors alongside unitholders.
As the Fund has grown, this discipline has become even more important. Facility structures evolve as lenders scale, counterparties refinance, or portfolios season. At times, capital can also be returned to the Fund unexpectedly as lenders adjust their own balance sheets. Maintaining flexibility on both the deployment and capital raising side allows us to respond to these dynamics without compromising portfolio quality or return integrity.
While this approach can result in periods when the Fund remains closed despite an active pipeline, it reflects the strategy’s underlying mechanics. Our focus remains on deploying capital only when structure, documentation and risk parameters are fully aligned, rather than optimising for predictability of inflows. Over time, this discipline has been a key contributor to the Fund’s ability to deliver consistent outcomes across cycles.
