Australian Ethical Fixed Interest WS (AUG0023AU) Report & Performance

What is the Australian Ethical Fixed Interest WS fund?

Australian Ethical Fixed Interest WS aims provide exposure to primarily Australian fixed interest securities that support the Australian Ethical Charter, generating income with some capital growth potential over the medium to long term. The fund seeks to invest in a diversified portfolio of interest-bearing investments generating income. The Fund is invested in primarily fixed rate bonds, from issuers such as the Commonwealth and State Governments, banks and other corporate issuers that meet the Australian Ethical Charter. The Fund aims to match the return of the UBS Composite Bond Index.

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For Australian Ethical Fixed Interest WS

Australian Ethical Fixed Interest WS Fund Commentary June 30, 2023

The net return of the Australian Ethical Fixed Interest Fund (Retail) for the quarter ended June 2023 was -3.07%, 0.12% behind the -2.95% return of the benchmark Bloomberg Ausbond Composite Bond Index 0+, with the gross return of the fund was -2.95%.

For the financial year to June 2023, the fund return was +0.85% (retail, net of fees), with the Bloomberg Ausbond Composite Bond Index 0+ return +1.24%. The 12 month gross return of the fund was +1.35%.

The negative return for the quarter was attributable to rising yields. The rise in yields reversed the falls seen over March 2023 following the collapse of Silicon Valley Bank and other regional banks in the United States. The Australian 10y yield, which had fallen 0.51% over the month of March, rose 0.71% over the June quarter. As the perceived risk of ongoing issues in the US banking sector receded, market focus returned to the need for central banks to continue tightening policy. It is accepted that the post-pandemic inflation peak has passed, but it remains unclear whether inflation with return to central bank target levels, with services inflation a particular focus both in the US and in Australia. Employment outcomes in both countries have run ahead of expectations through the quarter, with the May outcome for Australia driving a decline in the unemployment rate back to 3.6% despite RBA expectations it will end 2023 at 4.0% as the economy cools.

The fund has ended the June Quarter with a neutral duration position, accepting market pricing for the risk of additional RBA hikes over the latter half of 2023, but way of the aggressive cuts to policy priced for the US and any move higher in yields that may stem from trimming those expectations should economic data continue to surprise to the upside.

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Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Australian Ethical Fixed Interest WSAUG0023AUManaged FundsFixed IncomeBonds - AustraliaFixed Income - Bonds - Australia IndexAustralian Bond Composite 0-10Y Index0.00 M0.3%0.00%0%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Australian Ethical Fixed Interest WS0.3%3%6.86%-1.5%2.3%5.04%6.45%4.34%-1.99%-12.28%-14.12%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Australian Ethical Fixed Interest WSFixed Income - Bonds - Australia Index-0.31%-0.43%NA%NA%NA%1.160.77%0.8%10.99

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
Australian Ethical Fixed Interest WSYesLevel 8, 130 Pitt Street. Sydney NSW 20001800 021 227https://www.australianethical.com.au/enquiries@australianethical.com.au

Product Due Diligence

What is Australian Ethical Fixed Interest WS

Australian Ethical Fixed Interest WS 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 Australian Ethical Fixed Interest WS has Assets Under Management of 0.00 M with a management fee of 0.3%, a performance fee of 0.00% and a buy/sell spread fee of 0%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the Australian Ethical Fixed Interest WS has returned 0.3% in the last month. The previous three years have returned -1.5% annualised and 4.34% each year since inception, which is when the Australian Ethical Fixed Interest WS 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 Australian Ethical Fixed Interest WS first started, the Sharpe ratio is NA with an annualised volatility of 4.34%. The maximum drawdown of the investment product in the last 12 months is -1.99% and -14.12% 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 Australian Ethical Fixed Interest WS has a 12-month excess return when compared to the Fixed Income - Bonds - Australia Index of -0.31% and -0.43% 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. Australian Ethical Fixed Interest WS 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 Australian Ethical Fixed Interest WS provide?

Australian Ethical Fixed Interest WS has a correlation coefficient of 0.99 and a beta of 1.16 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 Australian Ethical Fixed Interest WS and its peer investments, you can click here for the Peer Investment Report.

How do I compare the Australian Ethical Fixed Interest WS with the Australian Bond Composite 0-10Y Index?

For a full quantitative report on Australian Ethical Fixed Interest WS compared to the Australian Bond Composite 0-10Y Index, you can click here.

Can I sort and compare the Australian Ethical Fixed Interest WS to do my own analysis?

To sort and compare the Australian Ethical Fixed Interest WS financial metrics, please refer to the table above.

Has the Australian Ethical Fixed Interest WS 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 Australian Ethical Fixed Interest WS?

If you or your self managed super fund would like to invest in the Australian Ethical Fixed Interest WS please contact Level 8, 130 Pitt Street. Sydney NSW 2000 via phone 1800 021 227 or via email enquiries@australianethical.com.au.

How do I get in contact with the Australian Ethical Fixed Interest WS?

If you would like to get in contact with the Australian Ethical Fixed Interest WS manager, please call 1800 021 227.

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the Australian Ethical Fixed Interest WS. All data and commentary for this fund is provided free of charge for our readers general information.

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Historical Performance Commentary

Performance Commentary - March 31, 2023

Australian Ethical is one of Australia’s leading ethical fund managers. By investing responsibly in well-managed ethical companies, we deliver competitive financial performance to our clients and positive change to society and the environment. Since our inception in 1986, our Ethical Charter has guided all investment decisions and underpinned our business practices. Every year 10 per cent of our profits* are distributed to charitable organisations and social impact initiatives through The Australian Ethical Foundation.

Performance Commentary - January 31, 2023

Performance Commentary - September 30, 2022

The net of fees return of the Australian Ethical Fixed Interest Fund (Retail) for the September Quarter was -0.73% (-0.68% Wholesale), below that of its Benchmark, the Bloomberg Ausbond Composite Bond Index 0+. Yields closed the quarter higher, with the 10y bond rate rising 0.22% to 3.88%, but the path was non-linear and volatile.

In the month of July, yields fell as expectations of highly aggressive central bank policy (hikes of +1% at a single meeting for the Federal Reserve or 0.75% for the Reserve Bank of Australia) were unwound. Markets had been buoyed by the possibility of a slowing in the pace of rate hikes after Jerome Powell, the chair of the Federal Reserve suggested rate rises to July had seen the cash rate reach some members estimates of neutral. The 10y bond yield fell 60 basis points over July to 3.05%, which saw the fund and benchmark perform positively, up just over 3.3%.

In August however, this move reversed, as Fed speakers sought to counter the benign view, emphasizing the fight against inflation was ongoing and the cash rate would need to move into outright restrictive territory, with Powell later shifting language to highlight the probability of some “pain” yet ahead for households and businesses. The fund and index fell 2.5% as a result and fell a further 1.4% over September as yields rose aggressively, with the 10y marking a high of 4.1% before easing into the end of the quarter.

The fund remains neutral duration, with modified duration at 5.16 vs the index at 5.20, and the yield to maturity at 3.97%.

Performance Commentary - June 30, 2022

The return of the Australian Ethical Fixed Interest Fund (Wholesale) for the June Quarter was -3.91% net of fees. Retail units declined -3.96% net of fees. The fund benchmark, the Bloomberg Ausbond Composite Bond Index 0+ declined -3.81%. The June quarter continued the same themes that were present in the March Quarter, with yields rising considerably and credit spreads widening. Markets have moved to price an aggressive response from central banks to high rates of inflation, with expectations they will need to go beyond normalization of monetary policy to pre-pandemic settings instead targeting policy that seeks to restrict activity.

Government bond yields increased a further 77bps over the quarter, with the 10- year bond yield increasing to 3.57%, having increased 1.11% in the March quarter. In June in particular, the 10-year yield reached a peak above 4.1% mid-month, before easing back as market fears about a possible recession began to emerge.

The yield to maturity of the Fixed Interest Fund sits at 3.55% at the end of June, in line with the benchmark yield at 3.56%, having started the year more than 2% lower at 1.46%. When bond yields rise, the market value of those bonds declines, and the extent of that movement is determined by the duration of the bond (or portfolio). Through the calendar year to date the fund has been positioned with a neutral duration relative to the index, and at the end of June fund modified duration sat at 5.2.

Performance Commentary - March 31, 2022

March Quarter gross returns for the Australian Ethical Fixed Interest Fund were -5.98%, 0.10% behind the fund benchmark, the Bloomberg Ausbond Composite Bond Index 0+. After fees the retail units fell 6.10% and wholesale units fell 6.05%. The significant decline for the quarter follows a volatile quarter which saw bond yields rising at almost all points across the yield curve: the 10 year yield increased from 1.6% to 2.8%. This repricing of bonds quickly moved beyond the anticipated “normalization” of interest rate policy by Central Banks, away from emergency settings introduced at the start of the pandemic, and instead quickly shifted to pricing a more aggressive stance of policy where interest rates are expected to be increased beyond a “neutral” level to a restrictive stance in order to fight inflation. This followed comments from the US Federal Reserve at their March meeting, indicating a willingness to do what was required to restore price stability after US inflation exceeded 7% though the first reads of the year. When bond yields rise, the market value of those bonds declines, and the extent of that movement is determined by the duration of the bond (or portfolio).

Since the end of the previous quarter, the fund has been positioned with a neutral duration versus the benchmark with a portfolio average of 5.8. The overall yield to maturity of the fund increased from 1.44% at the end of December to 2.59% at the end of the quarter. The fund remains in a neutral duration position.

Performance Commentary - January 31, 2022

The net return of the Australian Ethical Fixed Interest Fund (Retail) for the quarter ended December 2022 gained 0.3% (Wholesale 0.4%), 0.1% behind the +0.4% return for the benchmark Bloomberg Ausbond Composite Bond Index 0+.

Bond markets remained volatile through the quarter, with the 10y yield rising 0.18% over the quarter to close the year at 4.05%, after originally seeing a low of 3.32% in early December. Where originally tentative signs of inflation having peaked came through in the monthly US data, a move by the Bank of Japan to loosen the tolerance band on their ongoing Yield Curve Control measures roiled bond markets and drove long bond yields sharply higher.

Markets ended 2022 trying to assess whether the Bank of Japan moves signaled central banks globally would remain hawkish into 2023, and/or whether Japan’s famously low yields might edge higher and encourage some funds invested offshore to return home, sapping demand and pressuring yields higher. With another US CPI print since year end again suggesting inflation continues to ease, since year end yields have retreated from their end 2022 level.

Domestically the RBA remains priced to hike again in the first half of 2022, with considerable uncertainty what direction rates might take in the latter part of the year. The fund remains with a neutral duration position as a result.

Performance Commentary - September 30, 2020

The Fixed Interest Fund performed slightly behind the benchmark index after fees over the September quarter, rising 0.8% (0.9% Wholesale Fund) against the 1.02% return of the Bloomberg Ausbond Composite Bond Index. In the wake of the economic disruptions caused by COVID-19, the performance of fixed income has been determined by the capacity and outlook for central banks and governments to continue to provide support.

Over the September quarter both the Governor and Deputy Governor of the Reserve Bank of Australia (RBA) have suggested that a further small cut to the official cash rate may yet be in the RBA’s toolkit. Towards the end of the quarter markets had begun to price in expectations that this cut would be applied to the cash rate, the target rate for 3- year government bonds under yield curve control operations and the rate at which funding is made available to banks under the Term Funding Facility. The Fixed Interest Fund retained its neutral duration position throughout the quarter, delivering in-line performance before fees.

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