Consistency? This income fund hasn't missed a distribution in over 20 years
For Roy Keenan, Co-head of Australian Fixed Income at Yarra Capital Management, consistency isn’t just a goal, it’s a track record. Keenan has been at the helm of the Yarra Enhanced Income Fund since the early 2000s, and its purpose has remained unchanged: deliver stable, risk-adjusted income with a strong focus on capital preservation.
"If you go through our history, [the fund is a] really consistent distribution payer – it’s never missed a distribution", says Keenan proudly.
Targeting 230-280 basis points above the cash rate (after fees) and paying monthly distributions, the fund invests across the capital structure of corporate Australia, including senior credit, subordinated debt and hybrids, while maintaining an investment-grade average rating.
With a current yield just under 6%, Keenan believes it remains an attractive option for investors in today’s complex environment.
In the Fund in Focus above, Keenan explains how the portfolio has evolved in response to recent macro volatility, the tactical decisions that paid off (and a few he wishes he timed better), and where he sees the best relative value opportunities today.
He also unpacks how the fund is built around robust risk management, provides insight into its liquidity and distribution profile, and reaffirms the core principles that have underpinned its success for more than two decades.

INTERVIEW SUMMARY
A fund built for income, designed to endure
Roy Keenan has been managing the Yarra Enhanced Income Fund since its inception in 2003, and its mission has remained the same:
“We try to generate a return 230 to 280 [basis points] over cash, pay monthly distributions, and that’s what it’s done.”
Keenan explains that the portfolio delivers this by investing across the capital structure of corporate Australia, including banks, insurers and corporates, while keeping the average credit quality at investment grade.
“We’re not taking a lot of credit risk, and we’re trying to keep as much quality as we possibly can.”
Currently yielding around 5.9%, the fund blends high-yielding fixed income with hybrid securities to deliver income in a risk-conscious manner.

Riding the waves of macro volatility
Keenan notes that the past 12 months have been “an amazingly volatile” period, one that created opportunities for agile managers.
“Trump’s Liberation Day in April provided a tremendous opportunity... we got paid off in one month because the volatility was so great.”
That volatility enabled the team to capitalise on interest rate strategies, curve positioning and credit spread deployment, realising gains that might typically take a year.
Duration was a key lever. “We had our interest rate duration at about 1.7 years. There’s been times this year we’ve taken it back to about half a year", adds Keenan.
Adjustments were made as market pricing on RBA cuts shifted, with Keenan pointing to the ability to move on, once a thesis has played out: “If we have been paid for that, then let’s get out of there.”
Tactical lessons and missed opportunities
While satisfied overall, Keenan reflects candidly on missed opportunities.
“We had a steepening yield curve view for probably two years… In April, the yield curve topped out at 130 basis points. I got out too early at 112 to 113.”
He adds that the fund also missed chances to extend duration again when the market softened its stance on future RBA cuts.
“Harry Hindsight’s always very easy, but you do try to pick your levels.”
Where value lives now
Keenan remains bullish on major bank Tier 2 instruments.
“It’s hard to find better value in that A- space… we still think that’s a really safe place for the environment that we’re seeing at the moment.”
He’s also been increasing exposure to corporate hybrids, lifting the allocation from 8% to nearly 19%, with room to grow: “I could see that keep rising up to 25% over the coming 12 months.”
Risk management at the core
The fund maintains strict caps on exposure, both by credit rating and capital structure.
“It’s all about risk management,” Keenan says.
Liquidity is strong, with daily liquidity and 4–5% cash on hand, which is currently elevated as Keenan anticipates potential “risk-off” scenarios.
Through multiple cycles, volatile markets, and shifting macro narratives, the Yarra Enhanced Income Fund has stayed true to its mission, having proven to be a resilient vehicle for income-focused investors seeking steady returns without excessive risk.
Access to regular, stable income
The Yarra Enhanced Income Fund invests in high-yielding credit and hybrid securities to deliver superior returns compared to traditional cash management and fixed income investments. Learn more via the Fund profile below, or by visiting Yarra Capital's website.


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