Performance

Firstmac’s expertise in Residential Mortgage Backed Securities has seen over $16 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 May 2017


The High Livez fund achieved a strong distribution for the month of May with an annualised return of 4.48%, almost 3.00% above the official cash rate.

Over this period, the fund has maintained a relatively stable distribution each month while also benefiting from an improvement in its unit price.

The strong return is particularly pleasing at a time when most fixed income investments are offering record low yields presenting a major dilemma for investors who rely on income from their investments.

High Livez owns a diversified portfolio of investment grade assets called Residential Mortgage Backed Securities (RMBS) which are comprised of loans secured against people’s homes and which are usually accessible only to institutional investors. It also invests in some term deposits.

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

In May, the fund’s unit price increased month on month from $1.0496 to $1.0504, which represents an increase of 1.2% on the unit price 12 months ago of $1.0377.

The annualised Total Return for the past six years was 6.50%, which was comprised of a distribution return of 5.81% per annum and capital growth of 0.69% per annum.

With increasing regulation of banks and residential mortgage lending in particular, there appears to be an increasing market preference for debt (bonds) compared with equity (shares). This is quite logical as debt is perceived to be less risky as regulation of lenders increases while equity becomes constrained and is less likely to outperform. This has been reflected in Residential Mortgage Backed Security (RMBS) markets with improving demand for the bonds in which our fund invests. Our unit price reflects this trend.
 


 

# inception date was 29 March 2011.


Australian Credit Markets

Risky assets traded softer in May due to continued geopolitical concerns and the expectation that the US Federal Reserve will lift rates in June. The ASX200 was down more than 3% and the Australian ITRAXX, a credit index of 25 investment grade issuers, widened 4 basis points. Notwithstanding credit spreads widening, credit outperformed equities with the 4 basis point move equating to a loss of only 0.18%. Standard & Poor’s revised its estimate of the credit risk of the Australian banking industry which resulted in all Authorised Deposit-taking Institutions, save for the major banks, being downgraded by one notch. A credit rating downgrade is normally accompanied by credit spreads moving wider, however, the credit markets were largely unaffected with ASX-listed Tier 1 securities trading higher.

Australian Economic Update

The RBA left its cash rate unchanged at 1.50% in its May policy meeting.

The statement accompanying the decision plus the quarterly Monetary Policy Statement issued a few days later showed that the RBA still expects the economy to gather pace slowly through this year and 2018.

It believes this will eventually generate higher wage increases and higher inflation warranting higher interest rates in 2018.

This core RBA view is subject to more uncertainty than usual, with the risks skewed towards weaker than expected Australian growth. The key downside risk is unexpectedly soft growth in China as it seeks to extend economic reforms and rebalance its key economic drivers.

Too high household debt also presents a home grown downside risk to economic growth. The RBA together with other financial regulators is working to try and cap growth in household debt, especially investment housing debt.

Historical performance assumptions

*Total return for the 6 years to 31 May 2017 and 6.61% 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

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

 

Notice of change to the Constitution

*Total return for the 6 years to 31 May 2017 and 6.61% 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.