Performance Summary

Firstmac’s expertise in Residential Mortgage-Backed Securities has seen over $32 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 31 March 2022

As flagged in last month’s fund update, we have experienced some volatility in the Unit Price due to current geopolitical environment as well as rapidly-shifting inflation expectations and anticipated higher central bank interest rates.

As a result of these factors, the High Livez unit price fell from $1.0537 last month to $1.0469. At the time of writing, markets have stabilised with a slightly more positive tone. Our fund investments continue to perform well, in line with the Investment Committee’s expectations.

It is important to note that the investments of our High Livez fund are floating rate over the one-month bank bill rate. This means that the coupon rate on our underlying investments will increase by the same amount as the bank bill rate. Hence, rising interest rates will result in higher distribution returns (subject to ongoing asset performance).

Our Investment Committee is comfortable with the fund’s credit quality and strong underlying performance. Our fund therefore represents a hedge against inflation. We anticipate increasing distribution returns together with some volatility in the unit price.

The fund achieved a distribution return for the month of March of 2.39% per annum. The fund currently has surplus liquidity, based on which our Investment Committee is searching the market for good-quality assets that may offer some improved yield, with the objective of maintaining solid monthly distribution rates. This is the key objective of our fund. The Investment Committee anticipates some positive market opportunities over the next few months.

The Total Return for the past 10 years was 4.97% per annum consisting of 4.55% annualised distribution return and 0.43% annualised capital growth. Over the past year the Total Return was 1.90%, and over the past two years it was 3.32% per annum.

Underlying mortgage bond (RMBS) performance has been excellent, buoyed by a strengthening economic recovery, and rising house prices.

Data Table - High Livez Performance

Past performance is not indicative of future performance

# inception date was 29 March 2011

Annual performance (% per annum) Distribution Return Growth Return Total Return
1 year 2.36% -0.46% 1.90%
2 year 2.71% 0.61% 3.32%
3 year 3.09% -0.01% 3.08%
4 year 3.43% -0.10% 3.33%
5 year 3.66% -0.06% 3.60%
6 year 3.83% 0.15% 3.98%
7 year 3.97% -0.04% 3.93%
8 year 4.11% -0.02% 4.09%
9 year 4.30% 0.25% 4.55%
10 year 4.55% 0.43% 4.97%
Since inception# 4.84% 0.42% 5.26%

Australian Economic Update

Australian economic indicators released in March and early April show strong economic growth in Q4 2021 continuing in early 2022. Q4 GDP rose 3.4% quarter-on-quarter, the strongest quarterly rise since 1976, and annual growth lifted to 4.2% year-on-year from 4.0% in Q3. The labour market remained tight in February, with employment up 77,400 and the unemployment rate falling to 4.0%, equalling the lowest unemployment reading recorded in the past 40 years. Retail sales were strong again in February, up 1.8% month-on-month matching the rise in January. The value of new housing finance commitments fell in February by 4.7% month-on-month, a sign the housing boom is topping out. The Federal Budget provided more financial support to pensioners and low-to-middle income households. The RBA acknowledged that inflation is running higher than expected at its March policy meeting but is still prepared to be patient before hiking the cash rate waiting for full-employment (an unemployment rate around 3.75%) but concedes that could occur later in 2022.

Australian Credit Markets

Credit market volatility continued in March as the conflict in the Ukraine ratcheted up and the spectre of inflation and rising interest rates caused concern. The Australian iTraxx index started the month at 90 basis points, before hitting a high of 100 basis points in the middle of March. A short covering rally then led it to finish tighter on the month at 75 basis points. The iTraxx is a synthetic credit-derivatives instrument that tends to lead the physical cash market. The iTraxx started the year around 65 basis points when 5-year subordinated bank paper traded at 130 basis points. By the end of February, the iTraxx had moved 25 basis points wider but subordinated bank paper was primarily unchanged. However, in March subordinated bank paper moved around 60 basis points wider and remains at this level while the iTraxx eventually rallied. Other cash products such as RMBS, followed the move in subordinated bank paper and ended the month wider.

Historical performance assumptions

*Total return for the 10 years to 31 March 2022 and 5.26% 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. The PDS and target market determination are available at www.firstmac.com.au or by contacting Firstmac on 13 12 20.

High Livez downloads

Notice to Unitholders
Direct Debit Request
Eureka Report
Financial Services Guide
Firstmac High Livez Financial Report 2021
Firstmac High Livez Additional Investment
Firstmac High Livez SQM Report 2021
High Livez Performance Factsheet
Notice of change to the Constitution
Change of Compliance Plan Auditor
Change of External Dispute Resolution Scheme membership
Firstmac High Livez Notice of Change to PDS
Firstmac High Livez Letter to all members March 2020
Firstmac High Livez Letter to all members April 2020
Target Market Determination - Firstmac High Livez