Performance

Firstmac’s expertise in Residential Mortgage Backed Securities has seen over $14 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 October 2016
 

The High Livez fund continued its consistent performance in the month of October, delivering an annualised distribution return of 4.15%.

The latest result is 2.65% above the cash rate of 1.50%, meaning that over the past year the fund has consistently exceeded its objective of delivering distributions of more than 2.50% above the official cash rate.

This comes at a time when official interest rates remain at record lows, presenting many investors with a dilemma about how to live off the returns from their fixed income investments.

The unit price of the fund increased slightly from 1.0425 to 1.0473 month-on-month reflecting improving market conditions and increasing demand for the Residential Mortgage-Backed Securities owned by the fund.

High Livez continues to hold RMBS from some of Australia’s most highly-rated financial institutions including Westpac, AMP, National Australia Bank, the Commonwealth Bank, and Suncorp.

The Total Return for the past 5 years was 6.57% per annum, consisting of a distribution return of 5.76% and capital growth of 0.81%.

The Investment Committee noted the high credit quality of the portfolio including very low levels of arrears in the underlying residential mortgage securities.




Australian Credit Markets

While the Australian equity market was significantly softer in the month of October, down 3%, credit markets were relatively stable. Using the Itraxx Index as a proxy for the behaviour of fixed-interest credit assets, they were relatively stable, with the index trading in a tight range of 102bps to 105bps. During the month Qube subordinated debt listed on the ASX and closed on the day at $101.57 from its $100 issue price. The price performance of Qube debt is reflective of investors continuing to hunt for yield, which has pushed the issue margin down from BBSW+3.9% to BBSW 3.55%. The recent sell off in treasuries and government bonds (bond yields have been moving higher) has caused a step-up in volatility, particularly in emerging market equities, however, with High Livez fully invested in cash and floating rate notes it provides investors with a defensive position which still generates solid yield.

Australian Economic Update

The Australian economy is showing signs of reasonable past and current economic growth. However, fading economic growth is likely in the fourth quarter 2016 and beyond. GDP growth accelerated to 3.3% year-on-year in the second quarter from 3.1% in the first quarter, and there are signs that GDP growth may hold around 3% year-on-year in the third quarter. A marked narrowing of the monthly trade deficit since June means that exports are likely to make a very strong contribution to growth. The monthly trade deficit averaged just $1.7 billion per month in the three months ending September, compared with $2.3 billion per month in the three months ending June.

Historical performance assumptions

*Total return for the 5 years to 31 October 2016 and 6.80% 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 expended 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.

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*Total return for the 5 years to 31 October 2016 and 6.80% 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 of $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.

High Livez is issued by Perpetual Trust Services Limited ("Perpetual") ACN 000 142 049 AFSL 236648 as the Responsible Entity of the Trust. The Investment Manager is Firstmac Limited ("Firstmac") ACN 094 145 963 AFSL 290600. Firstmac High Livez and the Product Disclosure Statement (PDS) is available at www.firstmac.com.au or by contacting Firstmac on 13 12 20. The information in this document is general information only and does not take into account any person's situation, financial objectives or needs. You should read the PDS in its entirety before making any decision to invest. Perpetual and Firstmac strongly recommend you obtain independent professional financial advice on the risks and suitability of this product. The value of your investment in High Livez could go down as well as up. Past performance is not a reliable indicator of future performance. Restrictions may apply to the amount and timing of withdrawal requests - refer to the PDS for full details.