Manning Monthly Income Fund
The Fund is an unlisted Australian domiciled unit trust. It invests in a diversified portfolio of fixed income assets originated through domestic counterparties. The Fund is actively managed to enhance risk/return characteristics over time.
The Investment Manager seeks to generate absolute returns of RBA cash rate plus 5% per annum over rolling 5 years (net of fees, excluding tax) with returns primarily delivered as income.
The Fund provides cost-effective exposure to a diversified pool of Australian fixed income assets originated by selected counterparties.
Our firmly held belief is that there is significant opportunity in the expanding yet complex Australian fixed income market for investors to benefit from, but doing this properly takes time, resources and experience.
We aim to assist investors in navigating through its complexity and gain access to a diversified asset pool which we believe offers attractive risk-adjusted returns by providing the opportunity to invest in the Fund
The Fund targets a net return of RBA cash rate plus 5% per annum over rolling 5 years (net of fees, excluding tax) and limiting the risk of a negative return over this time period.
Investors should read the Information Memorandum and seek professional advice prior to taking a decision to invest.
Investment in the Fund is restricted to investors who qualify as ‘wholesale clients’ under Chapter 7 of the Corporations Act 2001.
A wholesale client is:
- A client who is applying for units in the Fund at a price, or for the value of at least $500,000 (s.761G(7)(a)).
- A client who has a certificate (issued within the last 2 years) from a qualified accountant stating that they have net assets of at least $2.5 million, and are applying for Units in the Fund for a purpose other than for use in connection with a business (s.761G(7)(c)(i) and regs 7.1.28(1), 7.6.02AC).
- A client who has a certificate (issued within the last 2 years) from a qualified accountant stating that they have a gross income for each of the last two financial years of at least $250,000 per year, and are applying for units in the Fund for a purpose other than for use in the connection with a business (s.761G(7)(c)(ii) and regs 7.1.28(2), 7.6.02AB and 7.6.02AC).
- A client who is a professional investor, which includes a client which is an AFSL Licensee, a body regulated by APRA, an entity which has or controls gross assets of at least $10 million (including assets held under trust), a listed entity, and a body corporate that carries on a business of investment in financial products (s.9, s.761G(7)(d) and reg 7.6.02AE).
- A client who is a sophisticated investor, which means a client in respect of whom Manning Asset Management is satisfied on reasonable grounds has previous experience in using financial services and investing in financial products that allows the client to assess the merits, value, and associated risks associated with the Fund, along with their own information needs and the adequacy of the information provided by Manning Asset Management in respect of the Fund. In this situation, Manning Asset Management must provide a written statement to the client explaining why it is satisfied with the client’s experience; and the client must sign a written acknowledgement that Manning Asset Management will not be treating the client as a retail client and giving them the retail disclosure documents (s.761GA).
Note: In reach of the above, the reference to “client” is a reference to an individual, a company or a trust.
The Fund generates returns through its exposure to a diversified portfolio of fixed income assets originated by domestic counterparties..
What assets are included in the Fund? How does MAM select these assets? Can these assets change over time?
The Fund can invest in any Fixed Income instrument including (without limitation) senior and subordinated tranches of residential mortgage-backed securities and asset-backed securities; senior and subordinated debt issued by corporates, banks and governments, whole or fractionalised interests in assets originated by bank and non-bank counterparty; units in managed investment schemes; cash.
The Fund is managed in line with the Investment Policy Statement (IPS) which mandates constraints in respect of various factors including but not limited to counterparties, asset class and single asset concentrations, WAL, duration, and liquidity.
The Fund through implementing the investment strategy as outlined in the IPS, may acquire other related assets which Manning Asset Management deems appropriate to enhance the investment strategy. For example, a derivative to manage interest rate risk. However, it is not currently envisaged that assets other than fixed income instruments will form a material portion of the Fund’s composition.
Manning Asset Management follows its investment process and philosophy in determining which assets to select. This includes detailed macroeconomic analysis, portfolio construction, counterparty due diligence following our 10 stage 100+ point questionnaire and finally asset analysis and purchasing. Comprehensive continuous performance monitoring and analysis of the purchased assets takes place together with ongoing counterparty dialogue
The assets to which the Fund has exposure to may change over time. The portfolio is adaptive to prevailing market conditions and is actively managed to enhance risk/return characteristics through time. Manning Asset Management operates an active monitoring and surveillance programme which informs future purchasing and reinvestment decisions.
Like all investments, the Fund involves a level of risk. There are a number of risks of investing in the Fund. These include, but are not limited to:
Investment risk– risk that the investment (or the investment manager) may not perform as expected in meeting its targeted investment outcomes.
Regulatory risk – risk that changes in the regulatory environment impacts the Fund’s activities, investments or performance.
Geopolitical risk – risk that geopolitical factors may directly or indirectly impact the macroeconomic environment in which the Fund operates.
Legal and tax risks – risks that changes to legislation or tax legislation impact the Fund’s investments or performance.
Borrower default/credit – risk that underlying assets fail to repay.
Liquidity – risk that units in the Fund cannot be readily redeemed on demand or distributions paid in a timely manner.
Interest rate – risk that fluctuations in interest rates impact the valuation of Fund assets.
Operational – risk that operational matters adversely impact the Fund.
Counterparty – risk that external parties (including service providers engaged by counterparties) fail to perform their financial or non financial obligations.
Investors should, before deciding to invest, read the Information Memorandum and seek independent advice.
Manning Asset Management does not guarantee the performance or success of the Fund and you may lose some or all of the capital invested. Past performance is not a reliable indicator of future performance.
3 – 5 years. Note that returns may vary within that timeframe.
No. Investors can redeem monthly providing the Fund has sufficient liquidity.
Liquidity is monitored on a continuous basis. The level of Fund liquidity will vary throughout the month depending principally on underlying repayments/prepayments flowing through from the underlying assets and reinvestment activity. Manning Asset Management aims to maintain sufficient liquidity to fund redemptions in a timely manner where possible, although there may be circumstances (eg where redemptions are materially higher than anticipated, during material market dislocation, force majeure) where this may not be possible and redemptions may be suspended or delayed.
The Fund may hedge some or all of any foreign exchange or interest rate exposure with the assistance of a specialist service provider
The Fund does not anticipate using leverage and derivatives for speculative purposes. The Fund will not seek to use gearing to boost returns.
Manning Asset Management charges a base fee of 0.5% of the balance per annum as at the last calendar day of each month. In addition, a performance fee of 10% of the Fund’s outperformance (post base fee) of the RBA cash rate calculated on a monthly basis, plus taxes is charged. This is subject to a high watermark and a cost recovery fee of up to 0.18% per annum.
In addition, there is a buy/sell spread of 0.25%/0.25% charged at time of investment (except for distribution reinvestments). This is paid into and retained by the Fund.
Please see Section 8, Fees and Costs of the Information Memorandum for a more detailed explanation.
Buy/sell spreads are charged on investments (excluding reinvestments of distributions). This is to compensate the Fund for its increased holdings of cash during the period taken to invest or redeem. Note that the buy/sell spread is retained in the Fund and not paid out as a fee to the Investment Manager.
Investors receive an investor statement monthly and monthly distribution statement together with a transaction statement after each transaction and an annual tax statement.
What is the Fund’s distribution policy? When does the Fund make distributions? In what form are these distributions made?
The Fund distributes all income received, net of its base fee and any performance fee and costs directly attributable to the Fund.
The Fund makes monthly income distributions. These can either be paid to your nominated bank account or reinvested in units of the Fund.
A commingled fund is a fund consisting of assets that are pooled together, enabling potential benefits from diversification and economies of scale compared to separate accounts. The risk profile of a commingled fund (such as the Manning Monthly Income Fund) will differ from a separately managed account (which holds assets specifically selected by or on behalf of an investor). The liquidity risk profile may differ given the ability of other investors in the Fund to request redemptions. Redemptions can be funded through a number of sources – through cash held in the fund, underlying asset repayments and if required through asset sales. Although the Fund will aim to manage liquidity to enable redemption requests to be met in a timely manner, in certain cases redemptions may be suspended if not in all remaining investors’ best interests. If there are significant redemptions resulting in the Fund reducing in size, investors who remain in the Fund may have exposure to a more concentrated pool of remaining assets (“tail risk”).
Credit and interest rate risk will also be borne on the Fund’s underlying exposures.
The Fund’s assets are valued at least monthly in accordance with the Fund’s valuation methodology to arrive at a fair valuation for new and existing unitholders.
The Fund’s valuation which drives its unit pricing takes into account the following variables: value of principal outstanding on all assets, cash flows received from the repayment of assets and not distributed out to unitholders, accrued interest, all fees, taxes and charges paid or received and a deduction for any asset which default on set repayments and remain outstanding. Fixed rate asset with long tenor (over 1 year) is typically valued at prevailing market interest rates i.e. mark to market.
The Fund invests in assets originated by selected counterparties. The structure of these assets varies on a counterparty by counterparty basis – the Fund’s exposures may be in many forms, including individual direct assets, asset pools, fractionalised elements of asset, term or warehouse notes, cash, bonds, or units in managed investment schemes. The proportions of these will vary over time.