Superior returns without duration risk
The driver of a large amount of fixed-income performance over the last decade has been the secular decline in long-term interest rates. As 10-year government bond yields creep higher again because of concerns about inflation, bond market performance has suffered. The AusBond Composite Bond Index lost 1.2% over the 12 months to April 2021, posting a record 3.6% loss in the month of February alone.
Led by 26 full-time executives, including 13 analysts and 5 portfolio managers, overseeing more than $6 billion in FUM, Coolabah Capital Investments' "quantamental" investment process does not rely on duration, or interest rate risk, as a source of returns. Coolabah's zero years duration, daily liquidity, Long Short Credit Fund has returned 11.7% to 11.9% net of all fees over the 12 months to April 2021. Notwithstanding the huge duration-induced losses in February 2021, the Long Short Credit Fund reported positive returns of 0.37% to 0.38% net of fees in that month alone.
Since inception, the Long Short Credit Fund has returned 5.3% to 5.4% annually after fees with 3.2% annual volatility*, representing an excess return above the RBA's cash rate of 4.3% to 4.4% annually after fees.
The Long Short Credit Fund's current average credit rating is AA-. It also carries an average MSCI ESG rating across its bond portfolio of AA.
* Volatility is the annualised standard deviation of daily net returns.