Active Sovereign Bond Strategy
Coolabah Active Sovereign Bond Fund
Actively Managed, AAA Rated, Government Bond Strategy
Overview
The Coolabah Active Sovereign Bond Fund (ASBF) aims to generate excess returns of 3% to 5% p.a. above its benchmark through exploiting relative value mis-pricings in high quality government bonds and related derivatives that have a low correlation to equity markets, credit markets and the level of interest rates.
The strategy is actively managed and aims to take advantage of attractive risk adjusted relative value opportunities that are expected to mean-revert towards an estimated fair-value, offer an attractive risk-adjusted yield, or a combination of both.
The Fund’s investment strategy is managed as a single pool but offers investors the ability to choose between two different interest rate exposures by investing in either the Zero Duration Class or the Long Duration Class. Each class has exposure to the main pool but offers a different level of interest rate risk which may affect its returns and be suitable for different interest rate environments. Interest rate risk is the risk that changes in interest rates can have on the value of your investment.
The Zero Duration Class (ETL9561AU) aims to deliver the Fund’s investment strategy over its Benchmark, the RBA Overnight Cash Rate. It offers a floating interest rate exposure resulting in low or near-zero interest rate risk.
The Long Duration Class (ETL5578AU) aims to deliver the Fund’s investment strategy over its Benchmark, the Bloomberg AusBond Treasury 0+ Yr Index. It offers fixed-rate bond exposure by matching its interest rate duration to that of the Index, which may be a source of interest rate risk. For further information on interest rate risk see Section 6 in the Product Disclosure Statement (PDS).
Investors can switch between the Zero Duration Class and Long Duration Class, depending on their view on the future movement of interest rates. Switches do not incur an Entry or Exit Fee or Buy/Sell Spread.
Investments
ASBF actively invests in a portfolio of high quality government bonds predominately issued by the Australian Commonwealth Government and related derivatives, and has a target portfolio credit rating of AAA.
While it also has the capacity to invest in bonds issued by the New Zealand and G7 governments, including Canada, France, Germany, Italy, Japan, the United Kingdom, the United States and the European Union, there are no current plans to do so for the foreseeable future.
ABSF invests in AAA rated Commonwealth bonds, which are used as the benchmark for the risk-free rate over time. While bank deposits have a AAA rated government guarantee, this caps out at $250,000.
Applying a diverse array of quantitative asset pricing techniques, ASBF’s portfolio managers seek to generate profits over and above the yield provided by the underlying fixed-income assets, by actively exploiting bond mispricings.
ASBF can use derivatives to implement the investment strategy and to hedge risks such as interest rate, currency and macro risks, and is permitted to borrow, use leverage and short sell to enhance alpha (or profits). Its use of derivatives, borrowing and shorting may result in the Fund being geared.
ASBF does not invest in state government bonds, bank bonds, corporate bonds, hybrid securities, equities, or property. It only invests in AAA rated Commonwealth bonds.
Risks
The Fund is not a bank deposit.
It is a managed investment scheme registered and regulated by the Australian Securities and Investments Commission (ASIC).
All investments carry risks, including that the value of investments may vary, future returns may differ from past returns, and that your capital is not guaranteed. The Fund can take long and short positions, borrow and use derivatives, meaning the Fund is geared (or leveraged). Leverage can amplify gains and also amplify losses.
To understand the Fund’s risks better, please refer to the detailed “Risks” section in the PDS and to the Fund’s Target Market Determination (TMD)^.
Ratings
Qualitative
The Coolabah Active Sovereign Bond Fund (ASBF) aims to generate excess returns above its benchmark through exploiting relative value mis-pricings in high quality government bonds and related derivatives that have a low correlation to equity markets, credit markets and the level of interest rates.
The strategy is actively managed and aims to take advantage of attractive risk adjusted relative value opportunities that are expected to mean-revert towards an estimated fair-value, offer an attractive risk-adjusted yield, or a combination of both.
The Fund’s investment strategy is managed as a single pool but offers investors the ability to choose between two different interest rate exposures by investing in either the Zero Duration Class or the Long Duration Class. Each class has exposure to the main pool but offers a different level of interest rate risk which may affect its returns and be suitable for different interest rate environments. Interest rate risk is the risk that changes in interest rates can have on the value of your investment.
The Zero Duration Class (ETL9561AU) aims to deliver the Fund’s investment strategy over its Benchmark, the RBA Overnight Cash Rate. It offers a floating interest rate exposure resulting in low or near-zero interest rate risk.
The Long Duration Class (ETL5578AU) aims to deliver the Fund’s investment strategy over its Benchmark, the Bloomberg AusBond Treasury 0+ Yr Index. It offers fixed-rate bond exposure by matching its interest rate duration to that of the Index, which may be a source of interest rate risk. For further information on interest rate risk see Section 6 in the Product Disclosure Statement (PDS).
Investors can switch between the Zero Duration Class and Long Duration Class, depending on their view on the future movement of interest rates. Switches do not incur an Entry or Exit Fee or Buy/Sell Spread.
Investments
ASBF actively invests in a portfolio of high quality government bonds predominately issued by the Australian Commonwealth Government and related derivatives, and has a target portfolio credit rating of AAA.
While it also has the capacity to invest in bonds issued by the New Zealand and G7 governments, including Canada, France, Germany, Italy, Japan, the United Kingdom, the United States and the European Union, there are no current plans to do so for the foreseeable future.
ABSF invests in AAA rated Commonwealth bonds, which are used as the benchmark for the risk-free rate over time. While bank deposits have a AAA rated government guarantee, this caps out at $250,000.
Applying a diverse array of quantitative asset pricing techniques, ASBF’s portfolio managers seek to generate profits over and above the yield provided by the underlying fixed-income assets, by actively exploiting bond mispricings.
ASBF can use derivatives to implement the investment strategy and to hedge risks such as interest rate, currency and macro risks, and is permitted to borrow, use leverage and short sell to enhance alpha (or profits). Its use of derivatives, borrowing and shorting may result in the Fund being geared.
ASBF does not invest in state government bonds, bank bonds, corporate bonds, hybrid securities, equities, or property. It only invests in AAA rated Commonwealth bonds.
The Fund is not a bank deposit.
It is a managed investment scheme registered and regulated by the Australian Securities and Investments Commission (ASIC).
All investments carry risks, including that the value of investments may vary, future returns may differ from past returns, and that your capital is not guaranteed. The Fund can take long and short positions, borrow and use derivatives, meaning the Fund is geared (or leveraged). Leverage can amplify gains and also amplify losses.
To understand the Fund’s risks better, please refer to the detailed “Risks” section in the PDS and to the Fund’s Target Market Determination (TMD)^.
Key Facts
| Name | Coolabah Active Sovereign Bond Fund |
|---|---|
| ARSN | 672 893 248 |
| Inception Date | 13-Dec-2023 |
| Applications | Daily |
| Withdrawals | Daily (T+3) |
| Distribution Frequency | Quarterly |
| Distribution Method | Reinvestment or paid out available |
| Issuer & Responsible Entity | Equity Trustees |
| Investment Manager | Coolabah Capital Investments (Retail) |
| Fund Administrator | Apex Fund Services |
| Registry | Apex Fund Services |
| Custodian | Citigroup |
| Auditor | Ernst & Young |
Pricing Information
| Class | Zero Duration Class | Long Duration Class |
| APIR Code | ETL9561AU | ETL5578AU |
| ISIN | AU60ETL95618 | AU60ETL55786 |
| Tradable | Directly with the Responsible Entity | Directly with the Responsible Entity |
| Investment Objective | Targets returns in excess of the RBA Overnight Cash Rate (RBACOR) plus 3.0% to 5.0% after Management Costs | Targets returns in excess of the Bloomberg AusBond Treasury 0+ Yr Index plus 3.0% to 5.0% after Management Costs |
| Management Costs | 0.65% p.a. | 0.65% p.a. |
| Performance Fee (%) | 20% of excess fund performance over the Benchmark after Management Costs subject to a high water mark | 20% of excess fund performance over the Benchmark after Management Costs subject to a high water mark |
| Benchmark | RBA overnight cash rate (RBACOR) | Bloomberg AusBond Treasury 0+ Yr Index |
| Minimum Investment | $1,000 | $1,000 |
| Additional Investment | $1,000 | $1,000 |
| Minimum Balance | $1,000 | $1,000 |
| Buy Spread | 0.000% | 0.00% |
| Sell Spread* | 0.01% | 0.01% |
Platform Availability
| Platform | Zero Duration Class | Long Duration Class |
|---|---|---|
| APIR Code | ETL9561AU | ETL5578AU |
| ASX/Cboe | No | No |
| AMP North | No | No |
| Australian Money Market | No | No |
| Beacon | No | No |
| BT Asgard | No | No |
| BT Panorama | No | No |
| Credit Suisse | No | No |
| Crestone | No | No |
| Diversa | No | No |
| FirstWrap | No | No |
| Hub24 | No | No |
| IOOF Pursuit | No | No |
| Key Invest | No | No |
| Macquarie Wrap | No | No |
| mFunds | No | No |
| Mason Stevens | No | No |
| MLC Navigator | No | No |
| MLC Wrap | No | No |
| Morgan Stanley | No | No |
| Netwealth | No | No |
| OneVue | No | No |
| Perpetual WealthFocus | No | No |
| Powerwrap | No | No |
| Praemium | No | No |
| UBS | No | No |
| uXchange | No | No |
| Wilsons Advisory | No | No |
Please contact us if the fund is not available on your platform of choice.
Distributions
Distribution Per Unit ($)
| Quarter Ending | Zero Duration Class | Long Duration Class |
|---|---|---|
| APIR Code | ETL9561AU | ETL5578AU |
| 30-Sep-24 | 0.79609858 | 1.080639311 |
| 30-Jun-24 | 0.39587349 | 0.00908106 |
| 31-Mar-24 | 0.27 | 0.2921477 |
Resources
Research Reports
- Foresight Analytics
- Lonsec (Contact Us)
- Zenith (Institutional Class - Contact Us)
Zero Duration Class ETL9561AU
Long Duration Class ETL5578AU
Frequently Asked Questions
- For the Zero Duration Class you can apply here.
- For the Long Duration Class you can apply here.
Complete a withdrawal request form and submit it to the responsible entity (RE). Further instructions are on the form.
The Fund’s investment strategy is managed as a single pool but offers investors the ability to choose between two different interest-rate exposures by investing in either the Zero Duration Class or the Long Duration Class.
Each class has exposure to the main pool but offers a different level of interest rate risk which may affect its returns and be suitable for different interest rate environments. Interest rate risk is the risk that changes in interest rates can have a negative impact on certain investment values or returns.
- The Zero Duration Class (ETL9561AU) aims to deliver the Fund’s investment strategy over its Benchmark, the RBA Overnight Cash Rate (RBACOR). It offers a floating interest-rate exposure resulting in low or near-zero interest rate risk.
- The Long Duration Class (ETL5578AU) aims to deliver the Fund’s investment strategy over its Benchmark, the Bloomberg AusBond Treasury 0+ Yr Index (BATY0). It offers fixed-rate bond exposure by matching its interest rate duration to that of the Index, which may be a source of interest-rate risk.
Please read the Product Disclosure Statement and Target Market Determination for more information on the Fund’s investment strategy and the two classes.
^From 5 October 2021, a Target Market Determination (TMD) is required to be made available under the Design & Distribution Obligations. It describes who this financial product is likely to be appropriate for (i.e. the target market), and any conditions around how the product can be distributed to investors. It also describes the events or circumstances where the Target Market Determination for this financial product may need to be reviewed.
*The Buy Sell Spread may change depending on the transaction costs associated with buying and selling the assets within the Fund’s portfolio at that time. Any changes to the spreads after the date of the PDS will be published here.
Disclaimer: Past performance does not assure future returns. Returns are shown after all fund fees, unless otherwise stated. Retail product fees can vary depending on the unit class selected and/or whether the financial advisory firm has negotiated access to lower cost unit classes.
Equity Trustees Limited (Equity Trustees) ABN 46 004 031 298 AFSL 240975, is the responsible entity for the Smarter Money Fund (SMF), the Coolabah Short Term Income Fund (STIF), Smarter Money Long-Short Credit Fund (LSCF), Coolabah Long-Short Opportunities Fund (LSOP), the Coolabah Floating-Rate High Yield Fund (Managed Fund) (YLD), the Coolabah Active Composite Bond Fund (Hedge Fund) (Ticker: FIXD), and the Coolabah Active Sovereign Bond Fund (ASBF). Equity Trustees is a subsidiary of EQT Holdings Limited ABN 22 607 797 615, a publicly listed company on the Australian Securities Exchange (ASX: EQT).
This has been prepared by Coolabah Capital Investments (Retail) Pty Ltd ACN 153 555 867 (Coolabah), an authorised representative (#000414337) of Coolabah Capital Institutional Investments Pty Ltd ABN 85 605 806 059 AFSL 482238, to provide you with general information only. In preparing this publication, we did not take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. The Product Disclosure Statement (PDS) for the Fund should be considered before deciding whether to acquire or hold units in it. A PDS for the Fund can be obtained by visiting www.stag.coolabahcapital.com. Neither Coolabah, Equity Trustees nor any of their related parties, their employees or directors, provide any warranty of accuracy or reliability in relation to such information or accepts any liability to any person who relies on it. Past performance should not be taken as an indicator of future performance. The Fund is subject to investment risks, which could include delays in repayment and/or loss of income and capital invested.
Ratings & Research Disclaimers
Zenith Investment Partners
The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned ETL9561AU & ETL5578AU June 2024) referred to in this piece is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual, including target markets of financial products, where applicable, and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at Fund Research Regulatory Guidelines.
AUSTRALIA
SYDNEY
Level 3, 1 Bligh Street, Sydney NSW 2000
MELBOURNE
Level 38, South Tower, 80 Collins Street, Melbourne VIC 3000
UNITED KINGDOM
LONDON
Second Floor, 28 Austin Friars, London EC2N 2QQ
NEW ZEALAND
AUCKLAND
Level 17, 1 Albert Street
Auckland CBD, Auckland 1010