The top-performing income funds for FY26

FY26 was anything but quiet, yet in many ways, the story remains the same as a year ago. Geopolitical volatility has continued to dominate the conversation, with the US-Iran war and the subsequent closure of the Strait of Hormuz triggering energy price shocks and keeping inflation elevated.

Rising bond yields have complicated matters for fixed-income investors, as longer-dated bonds have underperformed, while the environment has been more supportive for short-duration and floating-rate strategies.

For this year’s list of the best performing income funds, we have not differentiated based on whether it is an Australian or Global fund; instead, we split the ranking into four distinct categories: 

• Unconstrained Fixed Income
• Alternative - Private Debt
• Diversified Credit
• Non Investment Grade Debt

What this highlights is the many different ways that investors can find income. Each of these categories represents vastly different products and risk profiles, which potential investors would do well to familiarise themselves with. 

How we compiled these lists

These fixed income funds are all listed on the Livewire 'Find Funds' menu (top right-hand side of your page). It should be noted that this is not an exhaustive list of all the fixed income funds domiciled in Australia - there are others not listed in Livewire's 'Find Funds' marketplace.

The filters we used were:

• In the “Fund type” box, select “Managed Funds”
• In “Asset Class”, select “fixed income - Australian" and “fixed income - global"
• Filtered results based on 1-year returns
• We then manually cross-checked fund listings against category.

NOTE: While it is an interesting exercise to examine fund performance over a one-year period, most funds recommend minimum investment periods of five years or more. As such, it would be worthwhile to consider longer-term performance across cycles when researching funds or making investment decisions. Past performance is not a reliable indicator of future return.

The Results

Unconstrained Fixed Income

The fund invests mainly in investment-grade corporate bonds, asset backed securities, inflation derivatives, interest rate derivatives, bank bills, Negotiable Certificates of Deposit (NCD) and other deposit products, and is focused on delivering “consistent income and inflation protection over time”. 

Fortlake Founder and Chief Investment Officer Dr Christian Baylis and Catherine Drysdale manage the fund and its active management approach incorporates overlay strategies to enhance income, increase liquidity, and dampen downside volatility.

Alternative - Private Debt

Rixon Income Fund

Leading the way for the private debt cohort of income funds is the Rixon Income Fund, which returned 11.73% in FY26, sitting right at the top of the fund’s target return range of 10-12% per annum.

Rixon deploys an asset-backed, high-yield, non-property private credit strategy that provides senior secured lending to Australian SMEs seeking non-dilutionary debt funding of up to $20 million. Because this niche of borrowers is often too small for banks or large private credit funds, Rixon aims to leverage this scarcity of capital into higher returns.

It also requires all borrowers to offer “first ranking tangible asset collateral and service their interest expense monthly in cash”, which supports the fund’s ability to offer monthly cash distributions to investors.

Diversified Credit

Manning Monthly Income Fund

The strategy focuses on asset-backed securities and diversified credit assets, which are “handpicked and actively managed”.

A key part of the fund is Manning’s proprietary 10-step due diligence process, which it says “ensures rigorous asset selection and structuring, protecting capital while enhancing income potential across varying market conditions”.

Non Investment Grade Debt

PIMCO Capital Securities Fund

A key aspect of the fund is that it seeks to diversify investors’ Australian bank exposure by harnessing a diversified global opportunity set. The fund is also managed on an unconstrained basis and, according to PIMCO, the “absence of a typical fixed income benchmark emphasises the exposure to PIMCO’s highest conviction ideas within the global financial sector”.

Taking this highly-focused, “top picks” approach enables the PIMCO Capital Securities Fund to allocate based on its assessment of relative value and avoid undesired exposure to banks.