July 2023 – Market Commentary

The Fund delivered +0.78% in July, 8.97% over 12 months and 6.64% annualised since inception, continuing to deliver over 5% net return above the RBA cash rate.

With the rise of interest in fixed income investments, we have seen an accompanying increase in fixed income fund managers. Investors, therefore, look to understand how our Fund differs from these newer offerings.

In 2015 when establishing Manning Asset Management, we looked at the very best fund managers globally to understand what differentiates a good from a great fund manager, with two themes emerging. First, they do something and do it very well, or in other words, they ‘stick to their knitting’. Secondly and most importantly, they emphasise and ensure alignment of interest in every facet of their business. These two principles have been the foundations of Manning Asset Management.

We demonstrate our close alignment with investors by ensuring all fees, interest, and other related benefits flow to investors. We do not believe the practice of keeping establishment or upfront fees or other such monies paid when investing in a new transaction is fair to investors.  For example, a manager that retains the upfront fees and only passes on the interest payments to investors is incentivised to negotiate higher upfront fees and lower interest rates with borrowers which conflicts with the interests of our clients, who’s capital is ultimately being invested.  A fund manager should be incentivised to invest in transactions that best fit the fund’s risk-return profile, maximising returns and minimising risk. Removing this conflict as we do, removes any bias and allows a clearer perspective on safeguarding investor interests.

We prefer a fee structure that pays an amount for running the strategy and an approximately equal amount if we deliver on our investment objective of achieving the RBA cash rate +5% net of fees (circa 1% per annum in aggregate). This simple fee structure where we are not pocketing other fees along the way has been a vital element in not only ensuring we are best placed to safely manage investor capital through uncertain times but, importantly, has also been a source of additional investor returns and why we have outperformed several peers.

By prioritising specialisation and removing fee conflicts, we have been able to safeguard investor interests and maximise returns. As a result, the Manning Monthly Income Fund has consistently delivered upon its target return of RBA cash rate +5% net of fees since its 2016 inception. 

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