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.
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.
Senior Portfolio Manager
Senior Investment Anaylst
Senior Investment Analyst
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