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 December 2016
 

The High Livez fund continues to produce a stable level of earnings that exceeds our target return.

For December, 2016, the distribution was an annualised 4.27%, representing a margin of 2.77% above the official cash rate. This follows returns of 4.29% in November, 4.15% in October and 4.21% in September.

The positive tone is reflecting in the fund’s unit price which has been rising slowly but steadily since the first half of 2016. The unit price at 31 December 2016 was 1.0487 compared with 1.0377 in May 2016.

Markets appear stable and relatively unchanged from the close of 2016.

The fund’s underlying asset performance remains strong and in line with investment expectations. As you know, the assets held by the fund are a diversified portfolio of investment-grade Residential Mortgage Backed Securities (RMBS) which are comprised of loans secured against people’s homes, as well as some bank deposits.

The fund holds 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 five years was an annualised 6.48%, consisting of a distribution return of 5.63% and capital growth of 0.85%.

The Investment Committee continues to search for compelling investment opportunities that will satisfy the yield objectives of our fund while maintaining sound credit quality.
 

 


Australian Credit Markets

In the month of December, all financial markets recorded significant rallies. Equity markets were up 4.5% and credit markets, as represented by the Australian Itraxx index, tightened 11 basis points to 97.5 basis points, nearly marking a 12-month low point. The Australian rates market was a source of volatility.

This was due to the expectation that the US Federal Reserve would lift rates faster than previously expected, when in actuality rates stabilised and tightened, from 2.8% to 2.7%. A potential source of market volatility is a rise in government bond yields with the Federal Reserve continuing to “jawbone” that rates will be higher than the market expects. This volatility will have no direct impact on the High Livez fund as it only invests in floating rate notes, a positive characteristic in the current rising interest rate environment in the US.

Australian Economic Update

The RBA again left its cash rate unchanged at 1.50% at its December policy meeting and also implied in the accompanying statement that there was no pressing need to change interest rates based on its view that GDP growth would improve over time.
We believe that GDP most likely rebounded strongly in the fourth quarter of 2016, mostly from a sharp improvement in exports that pushed the international trade balance into a rare surplus in November. Otherwise, home buying activity still remains relatively strong. Home building approvals rebounded in November by 7.0% month-on-month, but only after sharp falls in October when they fell 11.8% and September when they fell 10.3%. Housing activity will be subject to conflicting forces in 2017 but the negative forces seem to be multiplying. Apart from rising mortgage rates, oversupply of new home units is a potential dampening force and others include much tougher restrictions in China on taking money out of the country. Low inflation, for the time being, means that the RBA can sit on the current cash rate of 1.50% for some months. It is unclear whether the next move in the cash rate - probably no earlier than late-2017 - will be up or down.

Historical performance assumptions

*Total return for the 5 years to 31 December 2016 and 6.75% 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.

High Livez downloads

 

Direct Debit Request


 

Eureka Report


 

Financial Services Guide


 

Firstmac and RMBS


 

Firstmac Financial Statement 2016

 

Firstmac High Livez Additional Investments

 

Firstmac High Livez SQM Report 2016

SQM Research provides independent assessment in managed funds to AFSL holders and their authorised representatives. SQM requires that you must be an AFSL holder or authorised representative to view this research.

      
 

Highlivez Performance Factsheet

*Total return for the 5 years to 31 December 2016 and 6.75% 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.