January 2024 – Market Commentary

As we move through Q1 of 2024, many of our clients are eager to understand our views on what this year may hold for the Fund and how we are positioning the portfolio. Foundationally, one needs to understand how we invest capital being bedded within an appreciation for why investors have invested with us over the prior 8 years. That being a desire for strong and consistent returns delivered as a monthly income stream and an acute focus on capital preservation. While the asset class freely delivers income via regular coupons, our primary efforts focus on capital preservation.

Long-time investors will observe our active management (see the below chart) by moving in and out of Australian credit sectors such as mortgages and consumer and business loans, navigating the portfolio away from areas where the risk profile is building or as significant opportunities present elsewhere. We deliberately avoid areas that we believe shall not perform through the cycle, such as construction finance, rather favouring assets that would be attractive to a wide variety of potential buyers in the unlikely event of the asset not performing. We are constantly evolving our approach, although the overarching principles remain unchanged and, over 8 years, have resulted in no negative months from credit/loss of capital.



Continuing our ethos of being a ‘through-the-cycle’ manager and Fund, we have little doubt that 2024 will contain isolated pockets of weakness within sectors and industries, which, in many cases, have been building for some time, and these are areas the Fund looks to avoid. Examining the Fund’s holdings, the portfolio is offering our investors historically elevated returns, and we are pleased to say the Fund isn’t currently displaying any areas of weakness.

We look forward to working on behalf of our clients in 2024 and delivering another year of strong and consistent income-based returns.

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