September, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%. For the September 2022 quarter, the Fund paid a distribution of 1 cent per unit.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220930-Alexander-Credit-Opportunities-Fund-1.pdfAugust, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220831-Alexander-Credit-Opportunities-Fund.pdfJuly, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220731-Alexander-Credit-Opportunities-Fund.pdfJune, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220630-Alexander-Credit-Opportunities-Fund.pdfMay, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220531-Alexander-Credit-Opportunities-Fund.pdfApril, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220430-Alexander-Credit-Opportunities-Fund.pdfMarch, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220331-Alexander-Credit-Opportunities-Fund.pdfFebruary, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220228-Alexander-Credit-Opportunities-Fund.pdfJanuary, 2022
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20220131-Alexander-Credit-Opportunities-Fund.pdfDecember, 2021
The Alexander Credit Opportunities Fund (the Fund) has an absolute return target above the benchmark in both rising and falling markets. The benchmark is the Bloomberg AusBond Bank Bill Index + 2%
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/20211231-Alexander-Credit-Opportunities-Fund-1.pdfNovember, 2021
The Fund returned 0.37% in November, 1.09% for the quarter, and 5.37% over the past 12 months. The redemption unit price at the end of the month was $1.3520781 . Pricing in risk markets generally deteriorated over the course November as COVID cases grew globally, firstly in Europe and North America and subsequently with the onset of the Omicron strain. The market reacted by adjusting its growth forecast down and as a result equites and credit were weaker while government bond markets rallied.
Within the domestic credit markets, the impact of September’s RBA policy change in relation the Committed Liquidity Facility (CLF) continued to adversely impact credit spreads in bank bonds and AAA RMBS. However, securities with a higher credit spread out performed on a relative basis as investors still grappled with the impact of near zero cash rates on nominal returns.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/ACOF-November-2021.pdfOctober, 2021
The Fund returned 0.34% in October, 1.12% for the quarter, and 5.67% over the past 12 months. The redemption unit price at the end of the month was $1.3470961 . Financial markets’ attention was dominated by moves in interest rates during October. A continuation of new economic data demonstrating a rise in inflation meant the trend established in September of rising government bond rates endured. The selloff in government bond markets was magnified domestically as the RBA stepped away from its 0.25% yield target on 3-year government bonds, leading to a significant re-pricing. Within credit markets, bank bonds were marginally weaker as prices adjusted to changes made by banking regulator APRA to the Committed Liquidity Facility (CLF), which will likely have the impact of banks holding less bank bonds and more government bonds. Corporate bond and structured credit markets were unaffected and credit spreads and new transactions were well supported over the month. The Fund’s outperformance in October was largely driven by exposure to private assets which offer a superior risk adjusted opportunity at this point in the market cycle
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/ACOF-October-2021-1.pdfSeptember, 2021
The Fund returned 0.37% in September, 1.22% for the quarter, and 6.20% over the past 12 months. The Fund paid a distribution 0.75 cents per unit for the quarter and the ex-redemption unit price at the end of the month was $1.3424771 . September was a challenging month generally for financial markets as investors grappled with the potential influence and longevity of raised inflation data. While the impact was most acutely felt within interest rate markets as government bond prices fell after a 6-month rally, equity markets were also down over the month. Credit markets were not immune with some softness in credit spreads, however, a general lack of supply versus demand for new issuance provided additional support. The Fund performance was supported by Alexander Funds ability to access a broad range of credit security types, thus giving it a bigger universe in which to identify the most attractive relative value opportunities on a risk adjusted basis
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/ACOF-September-2021.pdfAugust, 2021
The Fund returned 0.39% in August, 1.36% for the quarter, and 6.18% over the past 12 months. The redemption unit price at the end of the month was $1.3449631 . Price moves over August in financial markets were reasonably muted. Equity markets were generally higher, while government bond markets sold off slightly after a large rally in the months prior. Credit markets were broadly stronger in August, including domestically, with the Australian Itraxx CDS Index finishing the month 5bps tighter at 58.5.
Within the Australian credit market, new issuance within Structured Credit continues at pace as Non-Bank Financial Institutions look to access funding to support their expanding presence in domestic lending. Year to date public securitisation issuance is at its largest level in over 5 years, but despite the elevated supply of new bonds prices remains well supported as investors seek access to yield.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_be86e4d3c8f94305960f78a68445b07e.pdfJuly, 2021
The Fund returned 0.45% in June, 1.41% for the quarter, and 6.24% over the past 12 months. The redemption unit price at the end of the month was $1.3396791 . July saw financial markets respond to the growing impact of the Delta variant of COVID-19. Case numbers lifted globally, including in Australia as the NSW outbreak continued to grow. As the market digested a potential lowering of expected growth, asset classes reacted differently. Government Bond markets rallied significantly, leaving yields at their lowest level since early February. In contrast, equity markets finished higher for the month, partially due to the expectation of additional stimulus being provided if growth slows.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_1fa83a85d75944ac9f066e5b5d662c34.pdfJune, 2021
The Fund returned 0.51% in June, 1.43% for the quarter, and 5.86% over the past 12 months. The Fund paid a distribution of 4.24 cents per unit for the June Quarter and the ex-redemption price was 1.3336821 . Investment markets were fairly benign in June, despite the US Federal Reserve (Fed) raising its inflation expectations and bringing forward expected interest rate rises from 2024 to the back half of 2023. Contrary to this more aggressive view on rising interest rates by the Fed, in June the US 10-year government bond rate finished lower, while share prices continued to appreciate.
Australian markets broadly followed suit with local shares also higher and bond yields lower. The Reserve Bank’s Term Funding Facility (TFF), aimed at providing cheap funding to banks for on-lending to customers, ceased at the end of June. On the back of the TFF, new local bond issues were down approximately 40% for the 2021 financial year and represented the smallest amount issued in Australia since 2008, with no expectation of a material pick up in the short term. As a result, the market prices of existing bonds in the market have risen strongly, effectively acting as a “rising tide that lifts all boats”. However, this has left the future return outlook for segments of the fixed income market looking more challenged. In RMBS/ABS markets, new offerings have been dominated by Non-Bank Lenders. Prices in this segment have also benefited from the lack of new bonds being issued by the major banks. \
The Fund’s focus continues to be using Alexander Funds’ ability to unearth private loan deals that offer attractive reward for risk. Our access to these opportunities positions us favourably to deliver superior income returns to our investors despite the fact that large parts of the fixed income market is now most likely overpriced. The Fund continues to have a very healthy running yield and a low credit duration that helps to protect against large downside moves in the Fund’s unit price during periods of volatility.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_545d4a9d208448f797797f1d8b3f48cc.pdfMay, 2021
The Fund generated a return of 0.45% in May, 1.33% for the previous three months, and 6.91% compounded over the past 12 months. The Net Asset Value1 (NAV) of the Fund as at 31 May 2021 was $245.77m and the redemption price was 1.3691612 . Credit markets and government bonds were largely unchanged in May, while equities saw modest increases. Governments committing to additional fiscal policy measures both domestically and in the US helped support risk assets.
In Australia, the federal government announced an expansionary government budget in early May which, combined with very supportive monetary policy, has underpinned the market’s expectations for growth for the remainder of 2021. Beyond that, investors globally are debating the potential impact on inflation of combined monetary and fiscal programs and some of the expected structural change in labour markets due to the impact of COVID
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_3887ec2bda6749948d558f7b74cee625.pdfApril, 2021
The Fund generated a return of 0.47% in April, 1.39% for the previous three months, and 6.47% compounded over the past 12 months. The Net Asset Value1 (NAV) of the Fund as at 30 April 2021 was $249m and the redemption price was 1.3630762 .
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_b480777697654d7baf81595fd339f55a.pdfMarch, 2021
The Fund generated a return of 0.41% in March, 1.36% for the previous three months, and 5.86% compounded over the past 12 months. The Fund paid a distribution of 0.75 cents per unit for the quarter. The Net Asset Value1 (NAV) of the Fund as at 31 March 2021 was $248m and the ex-redemption price was 1.3566722 . A stabilisation in government bond rates and the continued roll out of aggressive fiscal expansion plans in the US created a supportive environment for risk assets during March. Domestically, despite growing momentum in house prices, the RBA has continued to publicly commit to its accommodative stance on monetary policy until there is sustained evidence of wage inflation.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_44eea01a448c4571a300058d096ab0e0.pdfFebruary, 2021
The Fund generated a return of 0.50% in February, 1.49% for the previous three months, and 3.66% compounded over the past 12 months. The Net Asset Value1(NAV) of the Fund as at 28 February 2021 was $243m and the redemption price was 1.3586682
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January, 2021
The Fund generated a return of 0.44% in January, 1.65% for the previous three months, and 3.62% compounded over the past 12 months.
The Net Asset Value1 (NAV) of the Fund as at 31 January 2021 was $245.7m and the redemption price was 1.3518732 . The first month of 2021 in the domestic credit market saw a continuation of the trends that dominated the last half of 2020, namely; limited new supply and a market effectively competing with central bank funding and thus being forced to bid spreads tighter. While the impact of this dynamic has been most acutely felt in the vanilla segments of the bond market, January saw spreads on lower rated corporate debt generally outperform as investors looked for yield.
With the RBA committed to the current setting of monetary policy for the foreseeable future, it appears likely that the more commoditised segments of the credit market will remain expensive. In order to adapt to these circumstances, a broad skill set and network within credit markets will be crucial to ongoing success.
At present, AFM’s efforts are heavily focussed on our pipeline of privately originated opportunities which still offer attractive nominal returns for investment grade risk. The ability to source, structure and manage these investments leaves the Fund well positioned to broadly sustain current portfolio yield despite the zero cash rate environment. At the end of the month the Fund had an average credit duration of 1.34 years and the yield-to-maturity of the portfolio was 5.84%3 .
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_e9e4db286e1143a98fef072c034a8fae.pdfDecember, 2020
The Fund generated a return of 0.53% in December, 2.05% for the previous three months, and 3.54% compounded over the past 12 months. The Fund paid a distribution of 0.75 cents per unit for the quarter.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_6da29aa4872641cb91bdf74b739e68e5.pdfNovember, 2020
The Fund generated a return of 0.66% in November, 1.87% for the previous three months, and 3.41% compounded over the past 12 months. The Net Asset Value1 (NAV) of the Fund as at 30 November 2020 was $243.87m and the redemption price was 1.3462832 . Risk markets maintained their positive bias during November, with double digit monthly returns in equity markets despite rising COVID numbers in the US & Europe and a US election result that threatens to maintain the status quo of political gridlock. Instead, the market chose to focus on the significant progress made in development of a COVID vaccine with hopes it can commence rollout in early 2021.
The combination of Victoria re-opening in earnest and significant stimulus from monetary and fiscal policy is providing healthy momentum in the Australian economy. In credit markets, the impact of RBA support programs, such as the TFF, have left investors scrambling to find yield and new bond issues have been well supported. This is particularly true for corporate bonds with limited supply to meet growing demand. The Fund’s November performance continued to reflect the overall strength in credit markets. Structured asset classes (ABS/RMBS) made an outsized contribution to return as market participants are forced to look outside pure corporate bonds to generate nominal returns in a near zero cash rate world. AFM is able to access a broader range of opportunities than offered in vanilla bond markets and the Fund has several new investments due to be funded by year end. These new investments will enhance the portfolio yield despite the aggressive pricing of risk in corporate bond markets. At the end of the month the Fund had an average credit duration of 1. 44 years and the yield-to-maturity of the portfolio was 4.79% .
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_899fd310a767468bad5d17bd8a0a6b06.pdfOctober, 2020
The Fund generated a return of 0.85% in October, 1.66% for the previous three months, and 3.00% compounded over the past 12 months. The Net Asset Value1 (NAV) of the Fund as at 31 October 2020 was $245.28m and the redemption price was 1.3374062.
News headlines in October were dominated by two topics; a growing second wave of COVID-19 infections in Europe and the result of the US election. Despite these uncertainties, the overall market response was, at the margin, suggestive of an improved outlook for growth, with equity markets generally higher and US government bond markets finishing weaker.
Domestically, market expectations of additional monetary stimulus measures from the RBA were delivered on at its November meeting, with the Overnight Cash Rate, target yield on 3-year Australian Government Bonds and the interest rate on the Term Funding Facility all reduced to 0.10%. These measures continued to drive credit spreads on senior bank bonds to near all-time lows as investors scrambled to find new opportunities to re-invest proceeds from maturing bonds.
The Fund was able to take advantage of this tail wind with a strong monthly return, resulting in a semi-annual return of 3.31%. With nominal and credit spread returns on the more vanilla segments of the credit market offering little investor reward, we believe the Funds access to a broad range of asset classes within credit provides a strong platform to maintain and build on the current portfolio yield. To this aim, we are in the process of finalising a number of new opportunities that will enhance the current portfolio return despite being investment grade risk.
At the end of the month the Fund had an average credit duration of 1.62 years and the yield-to-maturity of the portfolio was 5.35%.
File: https://commentary.quantreports.net/wp-content/uploads/2020/12/b05cc9_4b65e011d24f4818b2901da2776c4aae.pdfticker: OMF0005AU
commentary_block: Array
factsheet_url:
https://www.alexanderfunds.com.au/acof-documents-forms
ACOF Performance Report / Fund Update
release_schedule: Monthly
fund_features:
Alexander Credit Opportunities Fund has an absolute return target which means that it aims to produce positive returns in both rising and falling markets as well as a rate of return above the Fund Benchmark (the UBS Bank Bill Index plus 2% per annum).
- The Investment Manager focuses on identifying opportunities within the Australian and global credit markets that offer attractive risk adjusted returns.
- The Fund can invest in the full spectrum of fixed income products that include but are not limited to: corporate bonds, corporate debt, bank bills, commercial paper, loans, hybrid securities, unit trusts, mortgage-backed securities, asset-backed securities, structured credit securities, credit and other derivatives and credit linked notes, and convertible, preference and ordinary shares.
manager_contact_details: Array
asset_class: Fixed Income
asset_category: Diversified Credit
peer_benchmark: Fixed Income - Diversified Credit Index
broad_market_index: Global Aggregate Hdg Index
structure: Managed Fund