Examining the Australian economy, the case for the RBA cash rate falling in the near term remains overstated. In early 2024, we outlined two-way risk for the RBA cash rate (a chance it may rise or fall), with the likelihood of an increase fading although not dismissed. For credit investors, it remains essential to exercise caution in sectors most affected by the higher RBA cash rate and cost of living pressures. Most notably, consumer loans, which the Fund has not held for over 12 months, and construction finance/property development which the Fund is completely precluded from investing in due to the cyclical and high-risk nature of these investments. Furthermore, the case for active management, as demonstrated by the fund’s track record and varying sector exposures through time emphasises the importance of shifting away from certain market areas towards those that generally present lower risk, thereby achieving better risk-adjusted returns.
In the prior month, we assessed 14 opportunities for inclusion within the portfolio with strong market activity. These opportunities include transactions where our higher yielding fund can provide further credit support to the Manning Monthly Income Fund, lowering the investment’s risk profile.
During the month, we changed our External Valuation agent from Eticore to Nuwaru, who acts as our tax advisor and shall be complemented by an additional specialist provider in the coming weeks.
The Fund continues to grow its client base of high net worth and smaller institutional clients, resulting in further investment portfolio diversification.
