Coolabah’s Floating-Rate High Yield Strategy
A portfolio of investment grade “Floating-Rate Notes” with enhanced yields.
Coolabah Floating-Rate High Yield Fund
INVESTMENT GRADE, HIGH YIELDING, SHORT DURATION STRATEGY
Overview
The Coolabah Floating-Rate High Yield Fund (YLDX) focuses on generating higher income than other traditional fixed income investments by investing in a portfolio of investment-grade Australian Floating-Rate Notes (FRNs) with enhanced yields.
Investments
The Fund currently invests in a portfolio of cash securities and floating-rate, Australian bank and insurer issued senior and Tier 2 bonds with an average rating of “A-”. It has the capacity to invest in government bonds and corporate bonds.
In contrast to fixed-rate bonds, FRNs pay a variable-rate of interest that resets monthly or quarterly and moves up and down with changes in a recognised reference interest rate. In Australia, FRNs generally track the returns of the Reserve Bank of Australia’s (RBA’s) cash rate via a benchmark proxy called the quarterly Bank Bill Swap Rate (BBSW) plus an additional credit spread, or interest rate margin above BBSW.
Unlike a fixed-rate bond, a FRN has very low interest rate risk given the interest paid by an FRN will be highly correlated with moves in the RBA cash rate.
Disclaimer: The yield displayed for the Coolabah Floating-Rate High Yield Fund and the bonds is the annual running after management costs as of 31 July 2023. The yields shown changes daily and may be different on the day you invest. 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 has a different risk profile to the other comparisons, including, amongst other things, that it invests in bonds, not hybrids or equities, and that it uses leverage, which means that both gains and losses may be amplified. To understand the Fund’s risks better, please refer to the Product Disclosure Statement.
Coolabah applies bottom-up and top-down fundamental analysis of both issuers of the securities and the credit quality and structural features of the securities themselves to build a portfolio of Australian cash and debt investments that offer attractive yields whilst minimising the risk of capital loss.
The Fund does not invest in fixed-rate bonds, hybrid securities, equities or property.
The Fund is permitted to use leverage.
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 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 Floating-Rate High Yield Fund (YLDX) focuses on generating higher income than other traditional fixed income investments by investing in a portfolio of investment-grade Australian Floating-Rate Notes (FRNs) with enhanced yields.
The Fund currently invests in a portfolio of cash securities and floating-rate, Australian bank-issued senior and Tier 2 bonds with an average rating of “A-”. It has the capacity to invest government bonds and corporate bonds.
In contrast to fixed-rate bonds, FRNs pay a variable-rate of interest that resets monthly or quarterly and moves up and down with changes in a recognised reference interest rate. In Australia, FRNs generally track the returns of the Reserve Bank of Australia’s (RBA’s) cash rate via a benchmark proxy called the quarterly Bank Bill Swap Rate (BBSW) plus an additional credit spread, or interest rate margin above BBSW.
Unlike a fixed-rate bond, an FRN has very low interest rate risk given the interest paid by an FRN will be highly correlated with moves in the RBA cash rate.
Coolabah applies bottom-up and top-down fundamental analysis of both issuers of the securities and the credit quality and structural features of the securities themselves to build a portfolio of Australian cash and debt investments that offer attractive yields whilst minimising the risk of capital loss.
The Fund does not invest in fixed-rate bonds, hybrid securities, equities or property.
The Fund is permitted to use leverage.
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 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 Floating-Rate High Yield Fund (Managed Fund) |
|---|---|
| ARSN | 664 098 382 |
| Investment Objective | To provide investors with exposure to a portfolio of investment-grade Australian floating-rate notes with enhanced yields |
| Inception Date | 05-Dec-2022 |
| 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 | Assisted Investor Class |
| APIR Code | ETL5010AU |
| ISIN | AU60ETL50100 |
| Tradable | Directly with the Responsible Entity |
| mFund | - |
| Management Costs | 1.00% p.a. |
| Performance Fee (%) | None |
| Benchmark | Bloomberg AusBond Credit FRN 0+ Yr Index (BAFRN0) |
| Minimum Investment | $1,000 |
| Additional Investment | $1,000 |
| Minimum Balance | $1,000 |
| Saving Plan | Monthly |
| Savings Plan Minimum | $100 |
| Buy Spread | 0.00% |
| Sell Spread* | 0.05% |
Distributions
Distribution Per Unit ($)
| Quarter Ending | Assisted Investor Class | Institutional Class |
|---|---|---|
| APIR Code | ETL5010AU | ETL6855AU |
| 30-Sep-24 | 0.70 | 0.70 |
| 30-Jun-24 | 0.82245772 | 0.75314480 |
| 31-Mar-24 | 0.75 | 0.75 |
| 31-Dec-23 | 0.55 | 0.55 |
| 30-Sep-23 | 0.51 | 0.51 |
| 30-Jun-23 | 0.60 | 0.60 |
| 31-Mar-23 | 0.55 | 0.55 |
Platform Availability
| Platform | Assisted Investor Class |
|---|---|
| APIR Code | ETL5010AU |
| ASX/Cboe | No |
| Acclaim Invest | Yes |
| Acclaim Super | Yes |
| AMP North | Yes |
| Australian Money Market | Yes |
| Beacon | No |
| BT Asgard | No |
| BT Panorama | Yes (ETL6855AU) |
| CFS Edge | Yes |
| CFS FirstWrap | No |
| Credit Suisse | No |
| Crestone | Yes |
| Diversa | No |
| Hub24 | Yes |
| IOOF Pursuit | No |
| Key Invest | No |
| Macquarie Wrap | Yes |
| mFunds | No |
| Mason Stevens | Yes |
| MLC Navigator | No |
| MLC Wrap | No |
| Morgan Stanley | No |
| Netwealth | Yes |
| OneVue | No |
| Perpetual WealthFocus | No |
| Powerwrap | Yes |
| Praemium | Yes |
| Stropro | Yes |
| UBS | No |
| uXchange | No |
| Wilsons Advisory | No |
Resources
Research Reports
- Foresight Analytics
- Lonsec (Contact Us)
- SQM Research (Contact Us)
- Zenith (Contact Us)
Frequently Asked Questions
Complete a withdrawal request form and submit it to the responsible entity (RE). Further instructions are on the form.
^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 Smarter Money Higher Income Fund (SMHI), Smarter Money Long-Short Credit Fund (LSCF), Coolabah Long-Short Opportunities Fund (LSOP), the Coolabah Floating-Rate High Yield Fund (Managed Fund) (YLDX) and the Coolabah Active Composite Bond Fund (Hedge Fund) (Ticker: FIXD). 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.
SQM Research
The rating contained in this document is issued by SQM Research Pty Ltd ABN 93 122 592 036 AFSL 421913. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to change at any time. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme.
Zenith
The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned ETL5010AU 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
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UNITED KINGDOM
LONDON
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NEW ZEALAND
AUCKLAND
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Auckland CBD, Auckland 1010