Investing strategically.
Managing actively.

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.

The Manning Credit Opportunities Fund delivered +1.09% in May and 13.13% over the past 12 months. Since inception, the Fund has delivered an annualised return of 14.56%, continuing to exceed its objective of net returns of over 10% above the RBA cash rate.

Pipeline Progression

Transaction activity continued to build during the month, with several opportunities progressing meaningfully through the investment process. A number of transactions have now advanced beyond due diligence, with commercial terms agreed and documentation underway. The current pipeline includes a number of new lending relationships, together with a number of opportunities that fall uniquely within the Credit Opportunities Fund's mandate.

This marks a noticeable change from earlier in the year. Transaction volumes have increased, and as funding markets have become more selective, experienced long-term funding providers are increasingly negotiating from a stronger position. Beyond pricing, we are seeing improved commercial outcomes across a range of transaction terms, reflecting the value borrowers continue to place on certainty of execution and committed long-term funding relationships.

Portfolio Activity

Four existing lenders drew additional funds under their facilities during the month, reflecting continued growth across established portfolio relationships.

Beyond capital deployment, we continued working closely with several counterparties as their businesses evolved. This included supporting new lending products, extending long-term funding arrangements and working collaboratively on initiatives designed to strengthen funding capacity and support future growth. This remains an important, but often less visible, aspect of the strategy. Our objective is to become a long-term funding partner to a select group of high-quality lenders rather than simply providing capital for individual transactions. As relationships mature, opportunities frequently arise to support future growth initiatives, expand funding arrangements and continue improving the overall quality of the portfolio.

Looking Ahead

While the recent increase in activity is encouraging, the Fund's growth will continue to be measured. Many of the transactions within the strategy are bespoke, require extensive structuring and involve multiple counterparties. It is common for opportunities to remain under assessment for many months and, despite significant time and resources being invested, not every transaction ultimately proceeds.

For that reason, the Fund will continue to grow in line with completed deployment opportunities rather than investor demand alone. We believe this disciplined approach has been an important contributor to the Fund's long-term performance and remains fundamental to how the strategy is managed.

The portfolio continues to perform in line with expectations and the Fund remains closed to new and existing investors.

The Manning Monthly Income Fund delivered +0.72% in May, 8.50% over 12 months and 9.18% annualised over three years. Since inception, the Fund has delivered an annualised return of 7.34%, continuing to exceed its objective of net returns of over 5% above the RBA cash rate.

Discipline Is Being Rewarded

Much of the discussion surrounding credit over the past two years has focused on the significant amount of capital that has flowed into the asset class. While strong investor demand is often viewed positively, periods of abundant liquidity can also create their own challenges. When capital is readily available, competition for transactions typically increases, pricing tightens and lending terms can become increasingly borrower friendly.

In contrast, more balanced markets often create better conditions for disciplined credit investors.

As capital becomes more selective and competition moderates, there is generally less pressure on lenders and funding providers to compromise on structure, pricing or credit protections. Historically, some of the most attractive lending vintages have emerged during periods where capital remains available, but is deployed more selectively and with greater regard for risk. From our perspective, this is increasingly what we are seeing today. Existing transactions continue to broadly perform as expected, while the environment for new deployment has become progressively more attractive.

Portfolio Performance Remains Consistent

Importantly, this improvement in opportunity is not being accompanied by any deterioration in underlying portfolio performance. Lenders continue to draw under existing facilities and repayment activity remains consistent with expectations. Across the portfolio, we have not observed any material change in borrower behaviour, arrears, collateral quality or underlying asset performance.

The Quality of Opportunity Is Improving

While existing portfolio performance remains stable, the opportunity set for new deployment is becoming more attractive. For much of the past 12 to 18 months, strong inflows into credit created a highly competitive funding environment. In most parts of the market, this resulted in tighter pricing, weaker covenants and pressure on managers to deploy capital. When capital is abundant, borrowers and originators are often able to negotiate terms that are less favourable to investors, particularly where funding providers are competing to maintain deployment.

That dynamic is now beginning to reverse.

As capital becomes more selective and some funds reduce their participation, the balance of negotiation is shifting back toward reliable, long-term capital partners. We are starting see this not only through improved pricing, but also through the ability to negotiate stronger structures. This includes more conservative advance rates, tighter eligibility criteria, enhanced arrears triggers, stronger reporting requirements and more robust cashflow controls.

For credit investors, this is the more important point. Better terms do not simply mean higher returns. They can also mean better credit quality, stronger downside protection and more attractive transaction entry points. In other words, the improvement is not just in the income profile of new transactions, but in the quality of the risk being taken to generate that income.

Periods where portfolio economics and credit protections improve together are relatively uncommon. They tend to occur when capital is more discerning, competition is reduced and borrowers place greater value on certainty of execution. In those environments, disciplined capital is often able to achieve a better risk-adjusted return without moving up the risk curve.

Matching Scale With The Immediate Opportunity Set

This is also where the structure of a credit manager becomes increasingly important.

In periods of strong inflows, scale can appear to be an obvious advantage. Larger pools of capital provide greater funding capacity and allow managers to participate in larger transactions. However, in credit, scale must ultimately be matched by the availability of opportunities that meet the manager's risk and return requirements.

When capital grows faster than the relevant opportunity set, managers can face increasing pressure to deploy. This can lead to participation in larger transactions, broader mandates or structures where there is less direct engagement with the underlying lender and reduced visibility over asset performance.

The challenge is not necessarily the size of the transaction itself. Rather, it is that larger and more widely syndicated transactions can reduce alignment, limit influence over transaction terms and increase the distance between investors and the underlying source of credit performance.

The Fund continues to focus on a narrower segment of the market where we can partner with a select group of high-quality non-bank lenders and act as a meaningful funding provider. In many cases, this allows us to negotiate transaction specific protections, maintain close visibility over portfolio performance and work directly with counterparties as conditions evolve.

This approach can mean managing capacity carefully and allowing deployment to occur in line with suitable opportunities rather than investor demand alone. We view this as a strength. Credit markets do not reward capital simply for being available. They reward discipline in determining when capital should be deployed, on what terms and with what protections.

Our focus remains unchanged: to deliver a high level of monthly income while targeting capital preservation through disciplined deployment, active monitoring and conservatively structured asset-backed credit exposures.

The Manning Credit Opportunities Fund delivered +1.02% in April and 13.55% over the past 12 months. Since inception, the Fund has delivered an annualised return of 14.57%, continuing to exceed its objective of net returns of over 10% above the RBA cash rate.

Portfolio Evolution

Performance during the month was supported by continued activity across the portfolio, including further utilisation of existing facilities and the commencement of a recently settled transaction with a new lender relationship.

Three existing lenders drew additional funds during the month, reflecting ongoing growth within established counterparties and the continued deployment of capital into existing relationships. Alongside this activity, the Fund also continued working with several lenders on initiatives extending beyond their original financing arrangements, including support for new products and the progression of revised long term funding structures.

While new transaction origination often attracts the greatest attention, a significant portion of the Fund’s activity occurs after a facility has settled. As counterparties grow and mature, opportunities frequently emerge to increase facility sizes, support new initiatives and further strengthen transaction structures and investor protections.

Strengthening Existing Relationships

A key advantage of long term credit partnerships is the ability to participate in the ongoing evolution of a lender’s business. Over time, operational capabilities can improve, governance frameworks can become more sophisticated, technology platforms can be enhanced and funding structures can evolve. These developments often create opportunities to revisit transaction terms and further strengthen the overall credit profile of an exposure.

During the month, one existing facility was extended for a further two-year term following a comprehensive review of both the lender and the transaction structure. The revised arrangement incorporates a number of enhancements designed to support the lender’s continued growth while further strengthening structural protections within the facility.

This aspect of credit investing is often overlooked. While initial structuring and underwriting remain critical, some of the most attractive outcomes can arise from established relationships where familiarity, performance history and operational progress allow both parties to build upon an already successful foundation.

Activity and Opportunity

Transaction activity remains elevated across both existing relationships and prospective opportunities. In a market where transaction volume is increasing and funding conditions remain selective, the Fund continues to benefit from both new opportunity creation and the ongoing strengthening of existing relationships. While much attention is often placed on sourcing new transactions, we believe some of the most attractive risk adjusted outcomes can emerge from established counterparties that continue to improve operationally and strategically over time.

The portfolio continues to perform in line with expectations and we remain focused on disciplined deployment into opportunities where structure, control and pricing appropriately reflect the underlying risk profile of the transaction.

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The Manning Monthly Income Fund delivered +0.68% in April, 8.44% over 12 months and 9.20% annualised over three years. Since inception, the Fund has delivered an annualised return of 7.33%, continuing to exceed its objective of net returns of over 5% above the RBA cash rate.

10 Years of Disciplined Credit Investing

April marked a significant milestone for the Fund, reaching its 10-yeartrack record. Over the past decade, the Fund has delivered through a wide range of market conditions, including COVID-related dislocation, several major geopolitical conflicts and wars, the fastest interest rate tightening cycle in Australia in decades, inflationary pressure, liquidity shocks and periods of significant volatility across equity and fixed income markets. Throughout that time, the Fund has remained focused on the same objective: preserving investor capital while delivering a high and consistent level of income through disciplined, conservatively structured asset-backed credit exposures. Importantly, over its 10-yearhistory, the Fund has never experienced a negative monthly return from credit losses. We believe this consistency reflects the strength of the Fund’s disciplined underlying investment philosophy and unwavering focus on capital preservation through the cycle.

Policy Change, Inflation and Credit Markets

Recent months have seen an increasing focus on the interaction between fiscal policy, inflation and credit markets. The recent Federal Budget, evolving expectations around interest rates, and ongoing adjustments in property market conditions are all contributing to a more selective lending environment.

For credit investors, the relevance of these developments is less about predicting any single macroeconomic outcome and more about understanding how changing conditions influence borrower behaviour, refinancing dynamics and the quality of underlying collateral over time. Without taking a view on the policy itself, in periods when liquidity becomes more discerning, and policy settings evolve, differences in underwriting standards, portfolio construction, and structural protections tend to become increasingly important. Importantly, this does not imply broad deterioration across credit markets. Rather, it reinforces the distinction between lending exposures primarily supported by durable borrower cash flows and conservative collateral positions, and those more dependent on continued valuation growth, refinancing availability, or favourable market conditions.

As has already been written about extensively across financial markets following the Federal Budget, a number of proposed tax and housing policy changes may influence investor behaviour and financing markets over time. From 1 July 2027, the Government has proposed limiting negative gearing on residential property to new builds, while also replacing the current 50% capital gains tax discount with a system of cost base indexation and a minimum effective tax rate on capital gains. Whether implemented in their current form or not, these proposals are already contributing to a reassessment of long-term property investment assumptions and financing dynamics. At the same time, inflation remains above the RBA’s target range, with the cash rate increasing to 4.35% in May and trimmed mean inflation continuing to track above target. While inflation has moderated from peak levels, the adjustment process has been slower than many market participants initially expected. The practical implication for credit markets is that funding costs, borrower serviceability, and refinancing assumptions remain more important than they were during the low-rate environment of recent years.

Where Risk is Most Exposed

The transmission of these conditions through credit markets is uneven. Higher rates, changing tax settings and slower property market turnover do not affect all lending exposures equally. The impact depends on how the loan is repaid, how conservative the advance rate is, how quickly the exposure amortises and the extent to which repayment relies on refinancing, asset sales or valuation uplift.

In our view, this environment places greater emphasis on understanding where repayment is structurally sourced. Lending strategies reliant on single corporate borrower success/cash flow, project completion, development sales, residual stock realisations or high LVR refinancing assumptions can behave very differently once liquidity conditions become more selective. This is particularly relevant in construction and development finance, where repayment outcomes may depend heavily on future market conditions rather than existing borrower cashflows.

This is not a prediction of widespread stress across Australian property or credit markets. Australia continues to benefit from structural supports, including relatively low unemployment, population growth and a tightly regulated banking system. However, periods of adjustment tend to expose the difference between lending models that are structurally resilient and those more reliant on continued market momentum.

The Fund remains deliberately positioned away from any form of construction finance or development-related exposures. Within consumer lending, we also remain very cautious given ongoing pressure on household balance sheets and the cumulative impact of inflation and elevated interest rates.

The Fund currently holds over 78,000 individual asset exposures. In asset-backed credit, diversification is not a marketing point. It is a core risk mitigant. It reduces reliance on any single borrower, asset, or exit event and allows performance to be assessed through observable repayment behaviour across the pool.

Suddenly A Better Environment for Disciplined Capital

The opportunity set is also shifting. During much of last year and early this year, strong capital inflows into credit contributed to tighter pricing, weaker covenants and increasing pressure across parts of the market to maintain deployment. In some areas, this dynamic allowed borrowers and originators to negotiate terms that were significantly less favourable to funds/capital providers, particularly where managers faced strong inflows and limited capacity to hold elevated cash balances for extended periods. That dynamic is now changing. As funding markets become more selective and some participants pull back, we are seeing a greater number of attractive opportunities where stronger protections can be negotiated. This includes more conservative advance rates, tighter eligibility criteria, stronger arrears triggers, and more robust cashflow controls.

This is the environment in which alignment becomes increasingly important. A credit manager’s role is not simply to deploy capital. It is to determine when capital should be deployed, on what terms, and with what protections. In periods of abundant liquidity, the pressure to maintain deployment can lead to weaker structures and higher risk being transferred to investors. In more selective markets, patient capital can require more from lenders. For investors, this distinction is critical and becomes particularly important during periods where macroeconomic conditions, inflation, and policy settings are evolving simultaneously. Higher returns in credit should not come from accepting weaker protections or moving up the risk curve. They should come from being paid appropriately for risk, with structures that are designed to preserve capital if conditions deteriorate.

The Fund is currently in the later stages of progressing several larger transactions, which, if completed, are expected to further enhance overall portfolio quality and portfolio economics. Consistent with the nature of structured and asset-backed credit, these transactions involve detailed due diligence, legal negotiation and multi-party execution processes and therefore remain subject to completion risk until fully settled.

Positioned for the Current Environment

The Fund’s mandate provides flexibility to allocate across mortgage, business and consumer-backed exposures where we believe risk-adjusted returns are attractive. Importantly, that flexibility allows us to move away from sectors where risk is increasing and toward areas where collateral quality, borrower behaviour and structural protections remain more favourable.

As the broader market adjusts to a more selective lending environment, we believe the importance of conservative structuring, diversification and disciplined underwriting will continue to increase. The Fund remains focused on targeting a high level of income while preserving investor capital through selective deployment, active risk management and a consistent through-the-cycle investment approach.

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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