We highlighted last month that the recent underperformance of our holdings in NextDC bonds was somewhat perplexing, given the company’s extremely strong share price this year. This past month, right on cue, that underperformance began to be reversed. Our investment in the company is a high conviction position, so this was particularly pleasing to see. The business is benefiting from growth tailwinds related to data use and this positive trend was reconfirmed in the company’s recently reported annual results for 2020. We expect the business to refinance some of its existing debt over the coming year, possibly including our holdings, which makes them an attractive short-term investment opportunity.

A mild degree of profit-taking across the global credit markets saw a number of our corporate bond investments slightly detract from returns during August. One such investment was our holding in Nike Inc. bonds which, due to strong performance over prior months, led to a degree of selling in the market. In a similar vein, our holding in Verizon Communications Inc. also put a mild dent in last month’s returns. Verizon released strong second quarter results during the month and, like Nike Inc, we remain confident that further improvements in their operating performance are likely to help our investments perform well over the long-term. As such, should any market related weakness persist, we would most likely look to add to these positions.