High Livez Investment Performance

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Fund performance

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Data Table - High Livez Performance

Annual performance (% per annum)	Distribution Return	Growth Return	Total Return*
Current Month Annualised	6.35%	0.00%	6.35%
1 year	6.84%	1.45%	8.29%
3 year	4.85%	-0.16%	4.69%
5 year	4.17%	0.09%	4.25%
10 year	4.42%	0.03%	4.45%
Since inception#	4.98%	0.43%	5.41%

Past performance is not indicative of future performance

# inception date was 29 March 2011

Understanding the data

High Livez Fund investments are floating rate, which receive a fixed margin above a base rate. This means that in the event of inflation and rising interest rates, the Fund’s distribution returns are likely to rise, whilst if interest rates fall, distributions are also likely to fall. The correlation between the Fund’s distribution rate and the RBA’s official cash rate is illustrated in the above graph. The investments held by the High Livez Fund are loans, which means that in the event a borrower defaults, the High Livez Fund (and accordingly its investors) will not benefit from returns from that loan. All loans are subject to borrower default risk, and in a higher rate environment, this risk may be higher. An investment in the High Livez Fund is at risk, and is a different asset class to cash which is displayed by the RBA Cash Rate. Accordingly, an investment in the High Livez Fund is of a higher risk than an investment in cash. By displaying this graph, it is intended to show how the High Livez Fund’s returns may be affected by changes in the RBA Cash Rate, and it is not intended to compare an investment in the High Livez Fund to a cash holding.

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Performance Summary

Fund Objective

The Trust aims to provide stable monthly income returns from a diversified portfolio of Asset-Backed Securities supplemented by a small allocation towards Short Term Money Market Securities.

The Trust will invest in Asset-Backed Securities and Short Term Money Market Securities which are normally only available to professional and institutional investors.

Our Investment Committee is pleased with the results of our fund, delivering on our objectives of capital stability and regular monthly income. We also maintain and manage liquidity closely across our fund should Unit Holders choose to redeem at any month end.

Fund Update

During July, the Fund Unit Price was unchanged at 1.0583. The Unit price has remained at elevated levels over the past year arising from continuing demand in credit markets for the underlying bond instruments in which our fund invests. The momentum is broad spread across most credit markets.

Unit Price volatility has remained low within a very narrow band. This is consistent with the fund objective of providing stable monthly income for our unit holders.

The fund has experienced low Unit Price volatility of an annualised 1% (calculated since August 2012). This means that the movement in Unit Price is quite narrow, tracking closely to the mean. This is consistent with a low risk managed fund.

For the month of July 2024, our fund distributed an annualised 6.35%, representing a margin above the RBA cash rate of 2.00%.

The RBA Cash rate and BBSW1m are 99.4% correlated over a ten-year period. The RBA cash rate is widely understood and provides a useful explanation of fund returns, i.e. demonstrating that the fund returns are heavily influenced by changes in the RBA cash rate, as of course BBSW1m is highly correlated with the RBA cash rate.

Underlying asset quality remains strong, with low delinquencies across the underlying residential mortgages. We are pleased with our portfolio resilience however we do anticipate some increase in delinquencies associated with increasing mortgage rates. We expect all investments to be comfortably within tolerance over the months ahead.

The Total Return for the past 10 years was 4.45% per annum.

It is recommended that unitholders invest with a timeframe of 3-5 years. Over the past year three years, the Total Return was 4.69% per year, and over the past five years was 4.25% per annum.

The High Livez Fund is not capital guaranteed.

Australian Economic Update

Australian economic indicators released in July showed the economy growing but at soft pace and inflation easing but still above the RBA’s 2-3% target. June retail sales rose 0.5% m-o-m, after rising 0.6% in May. Housing indicators were mixed-strength in June with home building approvals down 5.5% m-o-m, but the value of housing finance commitments up by 0.5% m-o-m. The labour market remained tight, with employment up by 50,200 in June but the unemployment rate edging up to 4.1% from 4.0% in May. The Q2 CPI was in line with analysts’ expectations, up 1.0% q-o-q, 3.8% y-o-y from Q1 +1.0% q-o-q, +3.6% y-o-y, but underlying inflation moderated with the Q2 trimmed mean reading +0.8% q-o-q, +3.9% y-o-y from +1.0% q-o-q, +4.0% y-o-y in Q1. The RBA’s August policy meeting is expected to leave the cash rate unchanged at 4.35% after the slightly better than expected Q2 inflation outcome.

Australian Credit Markets

July saw volatility continue to persist in credit markets as growth/inflation and geopolitical tension continues to remain in headlines. Tier 2 saw a very busy month across both primary and secondary markets. After going the entirety of Q2 without major bank A$ 10NC5 supply, this streak was quickly broken in the first week of July with a A$1.5bn NC5 deal from Westpac (A$1bn FRN, A$500m FXD). This was the first Major Bank NC5 trade since the S&P rating uplift to the ‘A’ bucket and this was borne out with a very strong A$4.2bn orderbook and at the final pricing of +167bp it was the tightest print in nearly three years. A few weeks later ANZ priced a jumbo 15NC10 at ASW+183 to refinance their A$1.75bn 2024-call FRN line. The final size of A$1.9bn makes it the largest ever single tranche of A$ Tier 2. The late upsize to A$1.9bn likely took a few by surprise and resulted in a softer performance on the break - a very rare occurrence in the A$ Tier 2 market in recent years.

Historical performance assumptions

*Total Return for the 10 years to 31 July 2024 and 5.41% since inception on 29 March 2011. The total return is the Fund’s consolidated performance over the period referenced. 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 website is prepared and issued by Firstmac Limited ACN 094 145 963 (Firstmac) the holder of Australian financial services licence (AFSL) number 290600 in respect of Firstmac High Livez ARSN 147 322 923 (Fund). Perpetual Trust Services Limited ACN 000 142 049, the holder of AFSL number 236648 is the responsible entity (RE) and the issuer of the units in the Fund (Units). A target market determination for the Fund is available at www.firstmac.com.au or by contacting Firstmac on 13 12 20. This website has been prepared without taking account of your objectives, financial situation or needs. Before investing in the Fund, you should consider whether an investment in the Fund is appropriate having regards to your objectives, financial situation and needs and obtain appropriate professional advice. Prior to making a decision about whether to acquire, hold or dispose of Units you should consider the product disclosure statement (PDS) for the Fund available at www.firstmac.com.au. Past performance is not a reliable indicator of future performance and may not be repeated. Restrictions may apply to the amount and timing of withdrawal requests – refer to the PDS for full details.