Firstmac’s expertise in Residential Mortgage-Backed Securities has seen over $29 billion in RMBS issued since 2003. High Livez gives everyday investors access to this market, which is usually restricted to institutional investors.
Fund performance to 30 June 2021
In the month of June, the High Livez Fund achieved a strong distribution return of 2.48% per annum.
This was a solid 2.45% above the overnight cash rate of 0.03% and approximately 2.7 times the typical return on a term deposit.
Returns for the month have been quite stable compared with the prior four months reflecting the broader fixed-income market which has been buoyant in recent times.
The fund’s unit price was broadly unchanged, increasing from $1.0632 to $1.0637.
The Total Return for the past 10 years was 5.54% per annum consisting of 5.00% annualised distribution return and 0.54% annualised capital growth.
In general, market liquidity has been quite good, although bond prices are tending to be slowly bid higher, such is the drive of cash needing to find a home for investment.
The fund’s investments continue to perform well in line with the Investment Committee’s expectations.
Australian Economic Update
Australian economic indicators released in June and early July continued to show signs of strong growth. The COVID-19 lockdowns in various states may temper the strength in future releases temporarily. In June, the release of preliminary May retail sales showed a 0.1% m-o-m increase after lifting 1.1% in April. The value of May housing finance commitments rose by 1.9% m-o-m after increasing 4.3% in April. The biggest upside surprise came with the May labour force report showing employment up 115,200 in the month and the unemployment rate falling to 5.1% from 5.5% in April. The unemployment rate is now lower than it was before the start of the COVID-19 pandemic. The RBA board met early in the month and left interest rate settings unchanged – cash rate; term funding rate; and 3-year bond yield target all 0.10%. The RBA reaffirmed that it does not expect to lift interest rates until 2024 at earliest.
Australian Credit Markets
Australian credit markets continued to tighten in June as demonstrated through the Australian iTraxx coming in 4 basis points. Domestic senior bank paper, such as the NAB floating rate note maturity in 2031, also saw a slight tightening, although with the government’s Term Funding Facility (TFF) ending on June 30, the banks will have to come back to the debt capital markets and this may cause spreads to soften. Westpac has already come to the market with a USD 5 year deal swapped back to 48 basis points. The primary issuance landscape which has been dominated by RMBS and Asset-Backed Securities (ABS) issuance over the past 18 months, will be comprised of much more bank debt going forward.
Historical performance assumptions
*Total return for the 10 years to 30 June 2021 and 5.64% p.a. since inception on 29 March 2011. The total return is the trust’s consolidated performance over the period referenced. Past performance is not indicative of future performance and should not be the only factor considered when selecting an investment. Performance is calculated on an initial investment for $10,000 with distributions reinvested. Ongoing fees and expenses have been applied however individual taxes are excluded. This information is general information only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and consider obtaining financial advice prior to making an investment decision.