Benefits of investing in the Smarter Money Long-Short Credit Fund (Assisted Class)

• The Fund employs an "active fixed-income investment strategy, seeking to take long' and/or short' positions in relation to debt and hybrid securities which are considered mispriced, so seeking to profit from price rises and falls.

• The Fund has the ability to enhance returns through leverage.

• The Fund targets high absolute returns that outperform the RBA cash rate by 4% p.a. to 6% p.a. over rolling 3 year periods after management fees and performance fees.

• The Fund targets return volatility of less than 5% p.a. over rolling 3 year periods, which is approximately one-third the historic volatility of the Australian equities market. It is a medium to high risk investment.

• The Fund targets producing returns that have low to no correlation with Australian and global equities, fixed-rate bonds and property markets, which can smooth an investor's portfolio returns over time.

• The Fund can provide investors with added diversification to their investment portfolio.

• The Fund's investment strategy targets delivering risk-adjusted excess returns through identifying mispricings in liquid debt and hybrid securities that when exploited successfully will provide superior alpha.

• The Fund aims to reliably distribute strong quarterly income.

• Withdrawals generally available in your bank account after 3 Business Days during ordinary circumstances.

Risk level

Medium to High

Investor suitability

An investment in the Fund may be suitable for investors seeking:

1. relatively high absolute returns,
2. medium to high risk,
3. a suggested investment timeframe of 3 years or more, and
4. no or low correlation with mainstream asset classes such as equities, fixed-rate bond and property markets.

The Fund aims to reliably distribute strong quarterly income. It offers daily investment applications and withdrawals.

It is not recommended that the Fund be used for short-term investments.

About the Fund

The Smarter Money Long-Short Credit Fund is an absolute return fixed-income strategy focused on exploiting long and short mispricings in credit markets. 

The Fund targets returns above the "neutral" Reserve Bank of Australia (RBA) cash rate plus 4% to 6% p.a. over rolling 3 year periods after Management Fees, Administration Fees and Performance Fees. The Fund targets volatility of less than 5% p.a..

The Fund invests primarily in senior and subordinated debt securities, hybrids and derivatives issued by Australian entities domestically and overseas, although it can also invest in these types of securities when they are issued by overseas entities (into the Australian market or offshore). The Fund targets holding the majority of its portfolio in investment-grade quality debt securities and hybrids.

The Fund aims to generate high absolute returns that have low to no correlation with equities, fixed-rate bonds and property markets, from relatively low risk and liquid investments identified through the Portfolio Manager's active asset-selection process that has been proven over the last 6 years via the SMAC and SMHI strategies. The Fund aims to reliably distribute strong quarterly income.

The Portfolio Manager seeks to generate these returns by taking a "long or "short position in relation to assets which it considers are trading below or above fair value. The goal is to generate significant risk-adjusted returns, or "alpha. The ability to go long or short, either directly or through using derivatives, means the Fund can profit from price rises and price falls. Going long or short can also result in the Fund being leveraged.

How we invest your money

The Fund offers investors exposure to assets that are traditionally defined as defensive, including:

• cash and cash equivalents,

• senior and subordinated bonds,

• hybrid securities, and

• Asset-backed securities.

In addition to these physical assets, the Fund may also invest in a range of derivatives to express its strategy, including:

• interest rate derivatives,

• credit derivatives,

• foreign exchange derivatives,

• equity derivatives, and

• other related swaps and repurchase agreements.

The majority of the Fund's portfolio will be invested in assets of investment-grade quality, which means assets with at least a BBB- credit rating from a recognised rating agency.

While the Fund does not target equities investments, focusing on securities ranking higher up the capital structure, it can invest in equity derivatives (typically for hedging purposes) and hold equities as a result of its bond, hybrids and/or derivatives converting into shares.

The Fund does not expect to assume significant interest rate duration risk, which is limited to 24 months. This means the Fund expects to be mainly invested in floating-rate securities and/or fixed-rate securities that have had their interest rate risk hedged.

The Fund does not have a maximum or minimum exposure to cash or debt/hybrid securities. It may be fully invested in either depending on the magnitude of the potential mispricings the Portfolio Manager has identified.

Naturally, the Fund is not the same as a bank account.