The Manning Monthly Income Fund delivered +0.66% in June, 8.45% over 12 months and 9.15% annualised over three years. Since inception, the Fund has delivered an annualised return of 7.35%, continuing to exceed its objective of net returns of over 5% above the RBA cash rate.
#1 Diversified Credit Fund for FY26
We were pleased to see the Manning Monthly Income Fund ranked by Livewire Markets as the top performing diversified credit fund for FY26, with a net return to investors of 8.45%. This follows the Fund’s recognition as the top-performing Australian fixed interest fund for FY25.
League tables naturally change from year to year, but this recognition is particularly pleasing as the Fund enters its eleventh year.
The Fund’s performance is not the result of a strong single year or a favourable market cycle. It reflects more than a decade of delivering a high and consistent level of monthly income, with no negative monthly returns arising from credit losses since inception.
Importantly, these results have been achieved without focusing on construction or property development finance, concentrated non-investment-grade corporate lending or moving further up the risk curve. They reflect the same disciplined approach that has underpinned the Fund since inception: deploying only where the risk, structure, counterparty quality and investor protections meet our standards, and accepting slower deployment rather than compromising on capital preservation.
30 June: A Valuation Test for Credit Funds
Ahead of the financial year end, ASIC put credit funds on notice to ensure their 30 June asset valuations are current, accurate and based on realistic assumptions.
ASIC described the sector as entering its first real test, with pockets of higher defaults, impairments and loan amendments beginning to emerge. It also identified the risk of valuations lagging economic reality, particularly in property development, and inconsistencies in how funds define arrears, impairments, amendments and provisions.
ASIC’s message was clear. Managers should not wait for a formal default before reassessing the value and risk of an invetment.
This matters because reported returns can appear stable for some time if deteriorating assets are not appropriately valued or losses are not fully recognised.
In our view, an impaired investment is not necessarily made whole simply because an originator, manager or related entity provides a corporate undertaking or records an amount owing to the fund. That support must itself be enforceable, appropriately valued and recoverable. Otherwise, the economic shortfall may remain, even though the investment continues to be carried at or near its original value.
These issues are particularly relevant in vertically integrated structures where the same group originates the loan, manages the fund, services the borrower and has influence over valuation and impairment decisions. Vertical integration is not inherently problematic, but it creates conflicts that require genuine independence and strong governance. ASIC has specifically highlighted the increased conflict risk where valuation and impairment decisions may be affected by misaligned incentives during periods of stress.
The Fund Today
Manning provides structured funding to circa 25 specialist non-bank lenders across a broad range of asset-backed lending sectors.
As we enter the new financial year, the Fund is now in its eleventh year and remains positioned as intended. It has operated through COVID, liquidity shocks, rapid monetary tightening, periods of significant market volatility and changing economic conditions, while continuing to deliver a high and consistent level of income and preserve investor capital.
We are also entering a more attractive environment for new deployment. Participation across parts of the credit market has reduced, competitive pressure is easing and we are seeing opportunities with improved pricing, stronger structures and better investor protections. The Fund has recently carried a higher level of cash as several transactions progress through documentation and settlement, rather than compromising on quality simply to remain fully deployed.
The strength and stability of our investor base allows us to remain patient and selective while these opportunities progress. We thank investors for their continued support and remain focused on deploying capital where the structure, return and downside protections are appropriately aligned.
