The Fund delivered +0.80% in December, 9.43% over 12 months and 6.79% annualised since inception (April 2016), continuing to deliver over 5% net return above the RBA cash rate.

There are several Fund features that are important to investors, two key elements include the significant number of underlying loans within the portfolio (circa 15,000+ as at 31 December 2023) and diversification that this achieves, plus how we pick the right assets to perform through the economic cycle and structure them correctly. Both these foundational pillars have delivered consistent investor returns since the inception of the Fund in April 2016.

Structuring refers to the contractual obligations we put in place to control risk, and if those risk limits exceed our tolerance, they give rise to certain rights. By way of a simplified example, Manning will determine what level of arrears we are willing to tolerate when investing in a pool of underlying assets. The counterparty seeking finance must ensure those arrears levels are not exceeded. If these set levels are breached due to counterparty-specific or industry-wide issues, Manning would typically have a right to require that counterparty to repurchase some or all of those assets in arrears, or the facility would need to be closed and paid down. As closing the facility would be detrimental to that counterparty, they are highly incentivised to ensure those limits are not breached initially and, if they are, are quickly resolved before we exercise such contractual rights.

Given this approach, when structuring transactions upfront, we consider how that facility would be paid down should that counterparty not adhere to our pre-agreed risk limits. Importantly, we focus on ‘asset-backed’ transactions in that our financing is secured against assets that are of value and can be recovered to repay some or all of our capital. Therefore, a request to have our facility repaid can either occur through being refinanced or allowing those underlying assets, which are being regularly repaid, to repay our financed amount. This approach has ensured the Fund has never had a negative month from credit losses in its close to 8 year track record while investing through a variety of market cycles and economic conditions.

As 2024 commences, we remain vigilant of the outlook and are pleased to say all counterparts are operating within risk limits, and we do not see an elevated risk profile in our book.

We look forward to engaging with you throughout the year and wish all our investors a prosperous 2024.