Bond market investors must chase value, not yield
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.