The Income Fund gives our clients access to a diverse portfolio of fixed interest investments from around the globe. This fund combines our rigorous investment research with active portfolio management. As well as being an option to invest in this fund as part of a diversified investment strategy across our managed funds, this fund offers an alternative to bank deposits. Your money is invested throughout the world in a range of industries and sectors that are not available in Australasia, providing added diversification. Because this fund is designed to be a more conservative fund there are no investments in shares. You can also access your money at any time and there is a low minimum for investment.
Cash and fixed interest plays an important stabilising role in any investment portfolio. Think of it as something of a financial umbrella to offer your portfolio protection in difficult market conditions. This is because these types of investments are expected to offer more stable, though lower, returns over the long term.
The Fund holds a range of different investments, including corporate and Government bonds, as well as cash holdings. See below for more detail on these.
A highlight this month was our investment in Dell Technologies Inc. The company has benefited from the surge in demand for IT hardware and software solutions reflecting the increase in work from home trends stemming from the pandemic. In addition, the management team recently updated investors regarding long term business targets for the company and related capital allocation plans. The latter included a strong commitment to low financial leverage which is of course music to a lender’s ears. This caused the value of the company’s bonds to rise.
We were also pleased to receive an earnings update from Golden Goose – the Italian based branded footwear business we recently made an investment in. The company, with sales in over 70 countries, continues to grow strongly, reflecting its considerable brand strength. Pleasingly, the company also increased the share of its revenue that comes from sales direct to consumers (which are higher margin relative those sold through third party channels). Unsurprisingly, their bonds were in strong demand post the earnings update which caused their price to rise.
Closer to home, despite the COVID related lockdown, TR Group came to market with a new wholesale bond issue. The cash raised will help fund the ongoing growth of its business. As keen supporters of the company, we invested in the new bond, which saw strong demand. We expect the company to go from strength to strength in the years ahead – reflecting its ability to deliver the right truck, in the right condition for its customers.
A lowlight for the fund was our investment position in Banca Monte dei Paschi di Siena (‘Monte’). As mentioned last month, UniCredit, a competing Italian banking group, announced that it is considering an acquisition of Monte subject to certain conditions. Local press reports suggested the deal may not proceed, causing investors to reassess Monte’s risk return proposition. We continue to monitor this investment closely, remain engaged with the bank’s executive team, and are comfortable with the bank’s stand-alone business and balance sheet profile.
Head of Fixed Income
Senior Investment Analyst
Senior Investment Analyst
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