Bond market investors must chase value, not yield

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Previously an institutional only strategy for super funds, Coolabah has now made publicly available their market-leading, daily liquidity, long duration, Coolabah Active Composite Bond Fund (Hedge Fund) (FIXD), which seeks to deliver superior risk-adjusted returns to the Bloomberg AusBond Composite Bond Index.

Unlike traditional fixed-income strategies that typically drive returns by adding more interest rate duration risk, credit default risk, and/or illiquidity risk (or “beta”), FIXD is a core duration strategy that harnesses Coolabah’s active fixed income alpha style, focused on systematically exploiting mispricings to generate capital gains or alpha in addition to yield. 

FIXD focuses on high-grade (on average AA rated) government bonds, semi-government bonds, and investment-grade bank and corporate bonds, with the ability to go long and short to exploit falling or rising spreads.

Since its inception in March 2017, FIXD has returned 5.27% per annum after retail fees, 1.20% above the Bloomberg AusBond Composite Bond Index’s 4.07% per annum return. 

FIXD’s risk-adjusted returns are strong compared to the Index with since inception Sharpe and Sortino ratios of 1.2x and 1.5x respectively vs the Index’s 1.0x and 1.2x.

Driving this outperformance or alpha is a very large team that has had a long-term track record of delivering prescient macro and quant insights. As of July 2021, Coolabah has 27 executives, including 14 analysts and 5 portfolio managers spread across Sydney, Melbourne and London. Significant quantitative resources are involved in the search for mispricings with 30-40 proprietary quant valuation models built in-house. It is also characterised by a very active investment style, which has involved trading over $50 billion of cash bonds since January 2020, making Coolabah one of Australia’s most active fixed-income investors.

FIXD can be accessed on the Securities Exchange through your online share trading platform, stockbroker or financial adviser with the ticker FIXD, or directly with Coolabah’s Fund Administrator, under the APIR Code ETL2716AU through our website.

To read more about FIXD, please click here



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Disclaimer: Past performance does not assure future returns. Returns are shown net of ongoing annual fees and costs. Net returns are calculated from the historic gross returns using the current fee structure as displayed in the Product Disclosure Statement. Investors who apply for units directly with the Responsible Entity may pay a different price per unit to an investor who purchases those units on the Securities Exchange at the same time, and such differences may have a material impact on the performance of that investment. The above performance reflects the performance of the Fund where units are purchased and redeemed directly with the Responsible Entity only. Equity Trustees Limited (Equity Trustees) ABN 46 004 031 298 AFSL 240975, is the responsible entity for the Smarter Money Fund (SMF), the Smarter Money Higher Income Fund (SMHI), Smarter Money Long-Short Credit Fund (LSCF) and the Coolabah Active Composite Bond Fund (Hedge Fund) (Ticker: FIXD). Equity Trustees is a subsidiary of EQT Holdings Limited ABN 22 607 797 615, a publicly listed company on the Australian Securities Exchange (ASX: EQT). This has been prepared by Coolabah Capital Investments (Retail) Pty Ltd ACN 153 555 867 (Coolabah), an authorised representative (#000414337) of Coolabah Capital Institutional Investments Pty Ltd ABN 85 605 806 059 AFSL 482238, to provide you with general information only. In preparing this publication, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. The Product Disclosure Statement (PDS) for the Fund should be considered before deciding whether to acquire or hold units in it. A PDS for the Fund can be obtained by visiting www.coolabahcapital.com. Neither Coolabah, Equity Trustees nor any of their related parties, their employees or directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. The Fund is subject to investment risks, which could include delays in repayment and/or loss of income and capital invested.

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