Perpetual Active Fixed Interest Fund A aims to provide investors with regular income by investing in fixed income securities, primarily corporate bonds. To outperform the stated benchmark on an ongoing basis before taxes and fees. Diversifying the Fund amongst different securities issued by various borrowers, actively managing for changes in market wide and security specific credit margins, identifying and investing in relative value within the universe of credit securities. Derivatives are utilized in the management of the Fund.
The Fund’s running income above benchmark contributed to outperformance during the month. The Fund continues to collect a healthy yield premium above benchmark attributable to overweight allocations to domestic banks and non-financial corporates as well as off benchmark exposure to securitised sectors. The portfolio running yield at month end was 4.0% with the spread measured at 1.1%.
While rising bond yields impacted the Fund’s absolute return, the Fund’s marginally shorter than benchmark duration contributed to outperformance. Bond yields sold off throughout the month as markets priced an extended period of restrictive rates, in line with hawkish central bank rhetoric. The Fund maintained its relative duration positioning, marginally short of benchmark with an underweight exposure to very short end alongside a small allocation to securitised floating rate assets.
spread dynamics were mixed for performance. Spreads consolidated through September before widening towards the end of the month. Security selection within non-financial corporates contributed to credit spread return with issuers in the energy and rall sectors performing well. The Fund’s underweight allocation to semi-government spreads detracted slightly as semi spreads tightened. The Fund maintains an elevated exposure to credit relative to the benchmark with the largest active exposures in domestic banks, non-financial corporate and securitised sectors. The Manager was selective in adding issues to the portfolio during September. Allocation to offshore banks was increased while semi-government and government exposure were trimmed The Manager elected to take profit on a long position in the ITraxx Euro Xover index which tracks corporate Issuers on the cusp of
investment grade, closing the position in late September The outlook for credit is negative and the Manager remains cognisant of the challenging macro environment and the risks associated with tighter lending conditions. The Fund is defensively positioned and the manager remains focused on identifying relative value opportunities presented as the outlook improves.
What is Perpetual Active Fixed Interest Fund A Perpetual Active Fixed Interest Fund A is an Managed Funds investment product that is benchmarked against Australian Bond Composite 0-10Y Index and sits inside the Fixed Income - Bonds - Australia Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Perpetual Active Fixed Interest Fund A has Assets Under Management of 545.77 M with a management fee of 0.45%, a performance fee of 0.00% and a buy/sell spread fee of 0.2%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Perpetual Active Fixed Interest Fund A has returned 0.38% in the last month. The previous three years have returned -0.55% annualised and 4.88% each year since inception, which is when the Perpetual Active Fixed Interest Fund A first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Perpetual Active Fixed Interest Fund A first started, the Sharpe ratio is NA with an annualised volatility of 4.88%. The maximum drawdown of the investment product in the last 12 months is -1.82% and -13.59% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Perpetual Active Fixed Interest Fund A has a 12-month excess return when compared to the Fixed Income - Bonds - Australia Index of 1.66% and 0.36% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Perpetual Active Fixed Interest Fund A has produced Alpha over the Fixed Income - Bonds - Australia Index of NA% in the last 12 months and NA% since inception.
What are similar investment products?
For a full list of investment products in the Fixed Income - Bonds - Australia Index category, you can click here for the Peer Investment Report.
What level of diversification will Perpetual Active Fixed Interest Fund A provide?
Perpetual Active Fixed Interest Fund A has a correlation coefficient of 0.99 and a beta of 1.17 when compared to the Fixed Income - Bonds - Australia Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Perpetual Active Fixed Interest Fund A and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Perpetual Active Fixed Interest Fund A with the Australian Bond Composite 0-10Y Index?
For a full quantitative report on Perpetual Active Fixed Interest Fund A compared to the Australian Bond Composite 0-10Y Index, you can click here.
Can I sort and compare the Perpetual Active Fixed Interest Fund A to do my own analysis?
To sort and compare the Perpetual Active Fixed Interest Fund A financial metrics, please refer to the table above.
Has the Perpetual Active Fixed Interest Fund A been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Perpetual Active Fixed Interest Fund A?
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Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Perpetual Active Fixed Interest Fund A. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - August 31, 2023 The Fund’s running income above benchmark was a key contributing factor to outperformance during the month. The Fund continues to collect a healthy yield premium via overweight allocations to domestic bank, non-financial corporate and securitised credit. The portfolio running yield at month end was 3.9% with the spread measured at 1.1%.
Interest rate dynamics were positive for absolute return during a month of elevate volatility for bond yields. Long term yields sold off over the first half of August before recovering while the short end rallied throughout the month. The Fund’s underweight exposure to the short end detracted marginally from outperformance. In mid-August, the Manager rotated into shorter dated government bonds, adding exposure to 3-and-5 year tenors which contributed to outperformance as the curve continued to steepen. At month end, the Fund remained marginally short of benchmark duration.
Credit spread contraction was a significant contributing factor to outperformance during the month. Spreads continued to grind tightener, supported by better-than- expected corporate earnings and the slowed pace of monetary policy tightening. The Fund’s overweight allocation to credit was rewarded with non-financial corporates, domestic banks and REITs exposures all contributing to relative spread return. Off-benchmark allocation to RMBS was rewarded as securitised spreads performed well.
Sector allocations were actively managed during August. During a busy month for primary issuance, the Manager added exposure to domestic banks, taking part in new senior unsecured deals from Westpac, CBA and ANZ. Elsewhere, the Manager continued to rotate semi-government allocations, adding exposure to Treasury Corporation of Victoria while trimming other state government positions.
The outlook for credit is balanced, the Manager remains cognisant of the challenging macro environment and the risks associated with tighter lending conditions. The Fund is defensively positioned and the manager remains focused on identifying relative value opportunities presented as the outlook Improves.
Performance Commentary - July 31, 2023 The Fund’s robust running yield contributed to outperformance during the month. The Fund’s allocation to non-financial corporates, domestic banks and RMBS were the strongest contributors to relative Income return. The portfolio running yield at month end was 3.8% with the spread measured at 1.1%
Duration positioning detracted marginally from outperformance during the month. Short term yields rallied following the RBA’s decision to keep rates on hold while long term yields sold off marginally. The Fund’s underweight exposure to the belly of the curve was detracted from outperformance as 1-5-year yields rallied. While headline inflation has moderated, supply side disruption and tight labour conditions provide a challenging path for the RBA The Fund remains very marginally short of benchmark duration.
Credit spread tightening was the most substantial contributor to outperformance during the month more than offsetting the impact of the steepening yield curve The Fund’s overweight exposure to credit was well rewarded during the month as domestic spreads rallied, supported by subdued primary market issuance and robust secondary demand. Exposure to domestic banks-most notably longer dated subordinated positions-contributed strongly to outperformance. Elsewhere, Non-financial corporate, utilities and real estate sectors were constructive
Sector and risk allocations were broadly maintained during the month. The Manager elected to increase exposure to government bonds marginally Exposure to issuers in the insurance and energy sectors were selectively trimmed. While the primary market was quiet, the fund did take part in a new CMBS deal from Think Tank which priced during July
While the outlook for credit has improved, the Manager remains conscious of the challenging macro environment and the risks associated with tightening financial conditions. The Fund is defensively positioned and the manager remains focused on identifying relative value opportunities presented as the outlook contine Windows improve.
Performance Commentary - June 30, 2023 The Fund’s robust running yield contributed to outperformance during the month. The Fund’s allocation to nonfinancial corporates, domestic banks and RIMS were the strongest contributors to relative income return. The portfolio running yield at month end was 3.9% with the spread measured at 1.2%.
Duration positioning was the most substantial contributor to relative return over the month. Domestic yields rose sharply as investors priced in further RBA tate increases, while the curve flattened further, inverting for the first time since the GFC. The selloff in bonds led to a negative absolute performance for the month however the Fund’s marginally short of benchmark duration mitigated the impact, contributing to outperformance. Curve positioning contributed to relative return as the Fund benefitted from its overweight exposure to the long end of the curve which was resilient relative to the belly.
Credit spread dynamics were mixed for performance. Domestic credit spreads narrowed slightly on aggregate while remaining in range of recent levels. Security selection was positive for outperformance with a number of off-benchmark and overweight positions across utilities and infrastructure performing well. As a result of its elevated exposure to credit, the Fund benefitted marginally from tightening swap spreads as rising government bond yields outpaced swap rates over the month.
Sector and risk allocations were actively adjusted during the month. The Manger elected to reduce exposure to government bonds throughout the month, adding to semi-government exposures in secondary. The Manager elected to invest in the record-breaking Westpac subordinated deal alongside new issues in the insurance and utilities sectors.
In line with the challenging outlook for credit. the Manager remains cognisant of risks and selective in purchase made. While the Fund has selectively added risk over the June quarter, the Fund remains defensively positioned while retaining the capacity to take advantage of relative value opportunities.
Performance Commentary - May 31, 2023 The Perpetual Active Fixed Interest Fund in the month of May delivered a return of 40%. outperforming its benchmark by 02%.
The Fund’s robust running yield contributed to outperformance during the month. The Fund’s allocation to nonfinancial corporates. domestic banks and RMBS were the strongest contributors to relative income return. The portfolio running yield at month end was 3.6% with the spread measured at 1.1%
Duration positioning was the key contributor to outperformance during the month. Domestic yield moved higher over the month following the RBA’s decision to increase rates al their May meeting. The inversion of the short end of the curve deepened as 1.3 year yields sold off sharply. While rising yields impacted absolute return. the Fund’s short of benchmark duration positioning contributed to outperformance. Curve positioning was also construdive as the Fund benefitted from undenveight exposure to the very front of the yield cave.
Credit spread dynamics detracted from return. In a month of relatively benign spread movements. it is worth noting that the impact of scattered spread widening was more than offset by the contribution of both the Fund’s running yield and duration positioning. The Fund’s overweight exposut to non-financial corporates and Real Estate Investment Trusts detracted slighllyas these sectors underperformed. As a result of its elevated exposure to credit. the Fund benefitted marginally from tightening swap spreads as rising yields outpaced swap rates over the month.
The Manager was active in primary and secondary markets during the month and the Fund’s credit risk was selectively increasedas the outlook improved slightly. The Fund’s allocation to government bonds was reduced and the Manager elected to take part in a number of new corporate deals The Fund took part in new fixed r ale deals which included government adjacent issuer Australia Post. OIC shopping centre fund and energy network Ausnet Servtes ElseMiere. the Fund added exposure to domestic and offshore banks via new deals from ANZ. UBS and Credit Agricole.
The Fund remains defensively positioned while retaining the opacity to take advantage of relative value opportunities as the outlook improves
Performance Commentary - February 28, 2023 The Fund’s robust running yield continues to contribute to outperformance. Allocation to non-financial corporates, domestic banks and securitised sectors were the strongest contributors to relative income return during the month. The portfolio running yield at month end was 3.6% with the spread measured at 1.1%.
Interest rate dynamics were the key determinant of absolute return over the month. Bond yields sold off as investors priced an extended monetary policy tightening cycle and higher terminal rates. The Fund benefitted from its slightly short duration position – relative to benchmark – as yields rose. Curve positioning was constructive as the Fund’s underweight exposure to the very short end of the yield curve performed well as the curve flattened and inversion of 1-and-3 year yields deepened significantly. The Fund’s duration was selectively lengthened during January, ending month in line with the benchmark.
The Fund’s overweight allocation to Credit contributed to outperformance over the month as the credit spreads showed resilience in the face of rising discount rates. Domestic credit spreads tightened while remaining in range of recent levels and swap-to-bonds spreads also narrowed. The Fund’s allocation to non-financial corporates, domestic banks and Real Estate Investment Trusts were the key contributors to credit spread return. As well as benefitting from the broader move tighter in spreads, security selection was also rewarded across non-financial corporates and property sectors.
The Manager was active in primary and secondary markets during the month, adding to domestic and offshore bank exposures while selectively trimming allocation to non-financial corporates. The Manager rotated exposures within the semi-government sector, selling a number of shorter dated issues and adding longer dated WA and SA state government bonds. The Fund remains defensively positioned while retaining the capacity to add risk should the outlook for credit continues to improve.
Performance Commentary - December 31, 2022 The Fund’s robust running yield continues to contribute to relative return. The Fund’s allocation to non-financial corporates, domestic banks and securitised sectors were the strongest contributors to relative income return during the month. The portfolio running yield at month end was 4.1% with the spread measured at 1.6%.
Rising bond yields was the key determinant of the Fund’s negative absolute return during the month. Bond yields rose sharply over the final weeks of the year giving back a substantial portion of their gains since October. The Fund began the month marginally short of benchmark duration which contributed to outperformance as yields sold off. Over the course of the month, the Manager lengthened the fund’s duration before ending the year in line with the benchmark.
The contribution of credit spread movements to outperformance was negligible during December. Credit spreads traded in a tight range, narrowing slightly over the course of the month. The Fund’s overweight allocation to domestic bank paper was rewarded. As the credit outlook improves, the Manager is comfortable with the current credit exposure of the fund and its capacity to take advantage of upcoming opportunities.
Over the course of the month, the Fund benefitted from narrowing swap spreads. Swap spreads measure the difference between the government bond yield and the swap rate and is a component of return for fixed rate credit instruments. The Fund has elevated exposure to movements in swap spreads as a result of the overweight allocation to credit. Swap rates rose less than corresponding government bond yields during December, positively contributing to relative return.
Sector and risk allocations were broadly maintained during the month. Despite recent improvements in the credit outlook the manager remains cognisant of risks and selective in purchases made. Fund remains defensively positioned while retaining the capacity to add risk as the outlook for credit continues to improve.
Performance Commentary - November 30, 2022 The Fund’s robust running yield continues to be a key contributor to relative return. The Fund’s allocation to non-financial corporates, domestic banks and securitised sectors were the strongest contributors to relative income return during the month. The portfolio running yield at month end was 3.5% with the spread measured at 1.3%.
Credit spread dynamics were mixed for performance during the month. Financials outperformed, led by major bank spreads while non-financial corpore sectors corporate sectors saw widening. The Fund’s overweight allocation to domestic banks performed well while allocation to property and REITs detracted. The Fund’s small-long position in the Euro XOVER CDS index (which tracks European non-investment grade corporate issuers) contributed to relative performance as Euro denominated spreads rallied strongly during the month. As the credit outlook improves, the Manager is comfortable with the current credit exposure of the fund and its capacity to take advantage of upcoming opportunities.
Interest rate dynamics were positive for relative performance. Yields rallied over the month as the market priced in a slower rate of monetary tightening and a lower terminal cash rate. Curve positioning was constructive, the fund’s overweight exposure to the belly (3-7 years) of the curve performed well as the yield curve flattened. The Fund remains slightly short of benchmark duration and underweight the short end of the curve.
A considerable contributor to relative return during the month was the Fund’s exposure to swap spreads which retraced after widening sharply in October. The Fund has elevated exposure to movements in swap spreads as a result of the overweight allocation to credit.
Sector allocations were broadly maintained during the month. The Manager elected to liquidate a small number of short dated corporate bonds taking advantage of relatively stronger demand at the short end, reinvesting in longer dated government and semi-government issues. The Fund remains defensively positioned while retaining the capacity to add risk as the outlook for credit continues to improve.
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