Smarter Money Higher Income Fund - Direct Investor
About this Fund
|FUND MANAGER||Smarter Money Investments|
|ASSET CLASS||FIXED INTEREST|
|INVESTMENT STYLE||The Fund invests in a portfolio of Australian deposits, Australian investment-grade bonds (mainly issued by banks) and hybrids issued by banks and companies.|
|INVESTMENT PROFILE||The Fund is a low duration, short-term fixed-interest investment solution that targets returns that outperform the Benchmark by 1.5% - 3.0% per annum after all fees, over rolling 12 month periods.|
|BENCHMARK||RBA cash rate plus 1.5% per annum|
|FUND SIZE||RBA cash rate plus 1.5% per annum|
|NO. OF HOLDINGS||30-60|
|FEES||0.55% p.a. of the NAV of the Fund|
Benefits of investing in the Smarter Money Higher Income Fund - Direct Investor
Low to Medium (SRM 3)
Those seeking returns in excess of the RBA cash rate plus 1.5% to 3.0% per annum, after management costs, over a rolling 12 month period.
About the Fund
Smarter Money Higher Income is a low duration, short-term fixed-interest investment solution that targets returns that outperform the Reserve Bank of Australia's cash rate by 1.5% - 3.0% per annum after all fees, over rolling 12 month periods.
SMHI actively invest in a portfolio of Australian bank deposits, floating-rate notes and hybrids with a target dollar-weighted average credit rating in the "A band. SMHI does not invest in fixed-rate bonds (unless interest rate risk is swapped out), equities or overseas bonds. SMHI's portfolio managers add value through active asset-selection with materially lower volatility and interest rate duration risk than traditional fixed interest funds.
The Fund targets returns in excess of the RBA cash rate plus 1.5% to 3.0% per annum, after management costs, over a rolling 12 month period. Investors targeting returns above deposits and other "active cash investments may wish to consider the Fund.
How we invest your money
The Investment Manager is an active manager. This entails applying bottom-up fundamental analysis of both issuers of the securities and the credit quality and structural features of the securities themselves to build a diversified portfolio of Australian cash and debt investments, including listed hybrids, that offer attractive total returns whilst minimising the risk of capital loss. Active managers seek to exploit mispricings of assets and/or find undervalued securities in order to produce superior performance.
The Fund offers relatively low interest rate/duration risk with a target of less than 3 months by investing in cash and floating-rate notes, which generally track the returns of the RBA cash rate plus a spread or margin, and limiting the maximum term of any fixed-rate securities to 24 months unless the interest rate has been hedged to floating.
In addition to an active investment philosophy that seeks to profit from mispriced assets, the Fund also employs active asset-allocation between cash and riskier debt/hybrids securities. The Fund retains the agility to switch between cash and debt securities based on the portfolio managers' valuation views of each sector. When credit spreads are wide and the risk-return payoff on debt securities may be higher than cash, the exposure to these debt securities may increase. Equally when credit spreads compress the portfolio weight to cash may rise.
The ability to invest 100% in cash is a defensive attribute of the Fund.
Although the Fund is not the same as a bank account, the Fund does have a considered and diversified investment approach:
The Fund also has access to liquidity facilities that allow assets that are classified as "eligible securities for repurchase by the RBA to be swapped with major Australian and international trading banks in exchange for cash, subject to these banks accepting these assets as part of their own repurchase operations.
The Fund is actively managed by the Investment Manager and aims to take advantage of investment opportunities, and assets which are considered mispriced, within the Australian cash, fixed-income and listed hybrid (including bonds and preference shares with equity conversion features) markets. The fund targets holding 30 to 60 bonds, hybrid securities, and cash investments as appropriate, although the actual number of assets may vary from this target.
Investment in the Fund is not the same as putting your money into a bank account. The Fund invests in a range of Australian deposits, money market securities, rated and unrated floating rate notes, fixed-rate bonds, asset-backed bonds, and listed hybrids. The Fund may also invest in units in an ASX-listed fund or trust that solely invests in Australian-dollar denominated deposits, issued by Authorised Deposit-taking Institutions (ADIs) which are regulated by the Australian Prudential Regulation Authority (APRA). It is also possible that from time to time derivatives may be used to manage the Fund's risks when considered appropriate.