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 31 December 2020
We are pleased to report that the fund achieved a distribution return of 2.96% per annum for the month of December, 2020.
This was a solid 2.92% above the actual cash rate of 0.04%. It was also well above the Official Cash Rate which was reduced to a target of 0.10% in early November.
This month, our High Livez Unit Price was stable, barely changing from $1.0526 in November to $1.0525 in December.
The Unit Price bottomed in March 2020, at the height of COVID-19 fears, when it fell to $1.0342. Our fund has now recouped almost all of the price drop incurred from the onset of COVID-19 to now.
The Total Return for the past 9 years was 5.43% per annum consisting of 4.92% annualised distribution return and 0.51% annualised capital growth.
Underlying mortgage bond (RMBS) performance has been excellent, buoyed by the recovery of COVID-19 deferred mortgages, as reported by a broad range of lenders across the industry.
Australian Economic Update
Australian economic indicators released in November and early December showed more signs of recovery. Third quarter GDP rose by 3.3% quarter-on-quarter, more than expected. October employment rose 178,800 (market forecast -30,000) and the unemployment rate edged up to 7.0% (market forecast 7.2%). The RBA cut the cash rate by 15 basis points (bps) to 0.10% at its 3 November policy meeting and made similar cuts to its 3-year bond yield and Term Funding Facility target rates. It also introduced QE purchases of longer dated bonds. No further changes were made at its 1 December policy meeting but it reaffirmed easy policy conditions will stay for at least three years.
Australian Credit Markets
The upward trajectory of risk assets accelerated during November as the vaccines for the COVID virus were pronounced safe and ready for approval by regulators. Some markets performed better than others however. The US S&P was up 10.75% over the month and the ASX followed suit with a rise of 9.95%. Credit was slightly more muted, with the Australian iTraxx tightening by 11 basis points and cash spreads, such as the Australian bank Tier 2 product, tighter by 5 to 10 basis points, over the month. The lag in the credit markets is perhaps not surprising given their significant rally over the past 6 months. The spreads on Australian bank senior debt are now at their lowest level since the global financial crisis.
Historical performance assumptions
*Total return for the 9 years to 30 November 2020 and 5.70% 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.