Profit from a rising US dollar and rising interest rates

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Coolabah Capital Investments offers unique global fixed-income strategies denominated in US dollars. Over the last 12 months to 31 August 2022, the US dollar has appreciated 6.9% against the Aussie dollar.

Before accounting for these currency gains, Coolabah’s Smarter Money Higher Income floating-rate bond strategy, denominated in US dollars, generated positive returns after fees over this period despite huge global financial market volatility (up 0.61% before fees or 0.05%* after fees). At the same time, the AusBond Composite Bond Index declined by 11.5% while the S&P 500 Index slumped 11.3%.

Floating-rate bond strategies generally benefit from rising short-term interest rates. Coolabah’s Smarter Money Higher Income strategy has seen its yield to maturity jump from 1.8% in 2021 to 4.8% at the end of August 2022. It is currently over 5%.

If you would like to reduce your Aussie dollar risk by obtaining exposure to the US dollar, you can apply to invest in the Smarter Money Higher Income strategy’s USD unit class. Coolabah’s Long Short Credit Fund also offers a USD unit class

The above chart shows the running yield and yield to maturity of the Smarter Money Higher Income Fund (SMHI) in Australian Dollars (AUD). The USD Investor Class is unit class of SMHI and has exposure to the underlying assets hedged to US dollars.

Smarter Money Higher Income Fund - USD Investor Class

The Smarter Money Higher Income Fund - USD Investor Class (APIR: ETL3997AU) is a zero duration, short-term fixed-interest investment solution that targets returns that outperform the US Federal Funds Target Range by 1.5% to 3.0% p.a. after all fees, over rolling 12 month periods.

It gains exposure to an actively managed portfolio of Australian cash securities and investment-grade floating-rate notes with a target dollar-weighted average credit rating in the “A” band hedged to US dollars. It does not invest in fixed-rate bonds (unless interest rate risk is swapped out) or equities.

Smarter Money Long-Short Credit Fund - USD Investor Class

The Smarter Money Long-Short Credit Fund - USD Investor Class (APIR: ETL7843AU) targets returns above the US Federal Funds Target Range plus 4% to 6% p.a. after all fees, over rolling 3 year periods.

This strategy offers investor exposure primarily to senior and subordinated bonds, hybrids and derivatives, hedged to US dollars. The Smarter Money Long-Short Credit Fund targets holding the majority of its portfolio in investment-grade quality debt securities.

This strategy can take “long” or “short” positions in relation to assets which are considered are trading below or above fair value. The goal is to generate significant risk-adjusted returns, or “alpha”. The ability to go long or short, either directly or through using derivatives, means it can profit from bond price rises and price falls.

Click here to find out more about Coolabah and the US Dollar strategies.

*Please note that all investments carry risks, including that the value of investments may vary, future returns may differ from past returns, and that your capital is not guaranteed. The Smarter Money Long-Short Credit Fund can take long and short positions, borrow and use derivatives, meaning it is geared (or leveraged). Leverage can amplify gains and also amplify losses. To better understand the risks of both funds, please read the Product Disclosure Statement (PDS) and the Target Market Determination (TMD), which can be found at Equity Trustees Limited (Equity Trustees) ABN 46 004 031 298 AFSL 240975, is the responsible entity for the Smarter Money Higher Income Fund (SMHI) and Smarter Money Long-Short Credit Fund (LSCF). 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 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. Livewire gives readers access to information and educational content provided by financial services professionals and companies ("Livewire Contributors"). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

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