Macquarie Income Opportunities (MAQ0277AU) Report & Performance

What is the Macquarie Income Opportunities fund?

Macquarie Income Opportunities Fund launched in 2003 with aims to outperform the Bloomberg AusBond Bank Bill Index over the medium term (before fees). It seeks to provide higher income returns rather than traditional cash investments at all stages of interest rate and economic cycles. This portfolio invests predominantly in a high-quality core of liquid, investment-grade credit and cash, keeping its interest-rate duration fairly low.

  • It provides exposure to a wide range of domestic and global investment grade floating and fixed rate instruments, asset-backed securities, and cash.
  • Interest rate risk will generally be hedged through the use of derivatives such as swaps and futures.
  • A disciplined framework is used to analyse each sector and proposed investment to assess its risk. The Fund may be exposed to derivatives to implement its investment strategy.
  • The portfolio is generally hedged to Australian dollars. However, any exposure to emerging markets debt issued in the local currency of the debt will generally be unhedged.

Growth of $1000 Investment Over Time

Performance Report

Peer Comparison Report

Peer Comparison Report

Latest News & Updates For Macquarie Income Opportunities

Macquarie Income Opportunities Fund Commentary September 30, 2023

The Fund underperformed the benchmark over September. The key driver was duration positioning as the Fund maintained a position of approximately 3-years of duration, and this detracted from returns as yields rose significantly across the globe. Within the interest rate position, curve and country selection was a positive contributor, offsetting some of the losses. The Fund maintained a strong bias to shorter ends of the yield curve, which performed relatively well amid significant curve steepening, and a weighting toward Australian duration, which likewise performed relatively better. Credit performance was a modest positive, reflecting slightly wider spreads over the month, but defensive positioning and positive security selection in investment grade (IG). Within credit, positive contributors included credit hedges (as volatility began to increase late in the month), and issuers such as Australian banks, US corporates such as Oracle, and selected mortgage-backed securities. This was somewhat offset by renewed weakness in major US bank holdings, which slightly detracted.

The Fund made small changes to credit exposure over the month, reducing some remaining higher beta credits after very strong performance. This included trimming transport-related exposures in Europe, such as Heathrow airport and Abertis, a toll road operator – with spreads fully reflecting the more positive outlook and not compensating for the risk of volatility, in our view. The Fund added shorter dated credit and lower beta sectors such as utilities and healthcare in place of the sales, reflecting our view on credit beta. Within interest rate positioning, the Fund switched further from US duration to Australian duration, without changing the overall level of interest rate exposure, given the ongoing volatility and the fact that the US treasury market recently broke through key technical levels. We continue to expect opportunities to add to credit positions over time – particularly as we see spreads as relatively tight, against a backdrop of high economic uncertainty and increasing volatility in the underlying bond market.

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Product Snapshot

  • Product Overview
  • Performance Review
  • Peer Comparison
  • Product Details

Product Overview

Fund Name APIR Code
? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.
Structure
?
Asset Class
? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.
Asset Category
? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.
Peer Benchmark Name
? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.
Broad Market Index
? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.
FUM
? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.
Management Fee
? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.
Performance Fee
? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.
Spread
? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
Macquarie Income OpportunitiesMAQ0277AUManaged FundsFixed IncomeDiversified CreditFixed Income - Diversified Credit IndexGlobal Aggregate Hdg Index3.31 BN0.49%0.00%0.87%

Performance Review

Fund Name Last Month
? Returns after fees in the most recent (last) month).
3 Months Return
? Returns after fees in the most recent 3 months.
1 Year Return
? Trailing 12 month returns.
3 Years Average Return
? Average Annual returns from the last 3 years.
Since Inc. Average Return
? Average (annualised) returns since inception
1 Year Std. Dev. (Annual)
? The standard deviation (or annual volatility) of the last 12 months.
3 Years Std. Dev. (Annual)
? The average standard deviation (or annual volatility) from the last 3 years.
Since Inc. Std. Dev. (Annual)
? The average standard deviation (or annual volatility) since the fund inception.
1 Year Max Drawdown
? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
3 Year Max Drawdown
? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Since Inc. Max Drawdown
? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
Macquarie Income Opportunities0.76%0.73%4.99%1.19%4.11%3.45%3.44%2.25%-1.24%-6.14%-6.14%

Peer Comparison

Fund Name Peer Index Name
? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.
12 Months Excess Return
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
Excess Return Annualised Since Inception
? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.
12 Months Alpha
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
Alpha Annualised Since Inception
? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.
12 Months Beta
? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
Beta Annualised Since Inception
? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).
12 Months Tracking Error
? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
Tracking Error Since Inception
? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.
12 Months Correlation
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Correlation Since Inception
? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
Macquarie Income OpportunitiesFixed Income - Diversified Credit Index-1.17%-0.44%NA%NA%NA%1.561.39%1.85%0.990.72

Product Details

Fund Name Verifed by SMSF Mates Manager Address Phone Website Email
Macquarie Income OpportunitiesYes-https://www.macquarie.com/id/en.html-

Product Due Diligence

What is Macquarie Income Opportunities

Macquarie Income Opportunities is an Managed Funds investment product that is benchmarked against Global Aggregate Hdg Index and sits inside the Fixed Income - Diversified Credit Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Macquarie Income Opportunities has Assets Under Management of 3.31 BN with a management fee of 0.49%, a performance fee of 0.00% and a buy/sell spread fee of 0.87%.

How has the investment product performed recently?

The recent investment performance of the investment product shows that the Macquarie Income Opportunities has returned 0.76% in the last month. The previous three years have returned 1.19% annualised and 2.25% each year since inception, which is when the Macquarie Income Opportunities first started.

How is risk measured in this investment product?

There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Macquarie Income Opportunities first started, the Sharpe ratio is NA with an annualised volatility of 2.25%. The maximum drawdown of the investment product in the last 12 months is -1.24% and -6.14% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.

What is the relative performance of the investment product?

Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Macquarie Income Opportunities has a 12-month excess return when compared to the Fixed Income - Diversified Credit Index of -1.17% and -0.44% since inception.

Does the investment product produce Alpha over its Peers?

Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Macquarie Income Opportunities has produced Alpha over the Fixed Income - Diversified Credit Index of NA% in the last 12 months and NA% since inception.

What are similar investment products?

For a full list of investment products in the Fixed Income - Diversified Credit Index category, you can click here for the Peer Investment Report.

What level of diversification will Macquarie Income Opportunities provide?

Macquarie Income Opportunities has a correlation coefficient of 0.72 and a beta of 1.56 when compared to the Fixed Income - Diversified Credit Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.

How do I compare the investment product with its peers?

For a full quantitative report on Macquarie Income Opportunities and its peer investments, you can click here for the Peer Investment Report.

How do I compare the Macquarie Income Opportunities with the Global Aggregate Hdg Index?

For a full quantitative report on Macquarie Income Opportunities compared to the Global Aggregate Hdg Index, you can click here.

Can I sort and compare the Macquarie Income Opportunities to do my own analysis?

To sort and compare the Macquarie Income Opportunities financial metrics, please refer to the table above.

Has the Macquarie Income Opportunities been independently verified by SMSF Mate?

This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.

How can I invest in Macquarie Income Opportunities?

If you or your self managed super fund would like to invest in the Macquarie Income Opportunities please contact via phone or via email .

How do I get in contact with the Macquarie Income Opportunities?

If you would like to get in contact with the Macquarie Income Opportunities manager, please call .

Comments from SMSF Mates

SMSF Mate does not receive commissions or kickbacks from the Macquarie Income Opportunities. All data and commentary for this fund is provided free of charge for our readers general information.

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Historical Performance Commentary

Performance Commentary - August 31, 2023

The Fund outperformed the benchmark modestly over August, on a gross of fee basis. Duration positioning was a positive contributor, despite significant volatility and weakness in rates markets, with curve and country positioning the key benefit. Credit positioning was a flat contributor, with positive contributions from investment grade offset by emerging markets. Within credit sectors, investment grade credit was a positive contributor, with Australian banks, insurance issuers and selected offshore names (such as Amgen) key positive contributors. Australian mortgage-backed securities were also a positive contributor, with very stable running yield the driver in this sector. Emerging markets detracted, reflecting underperformance of small holdings of African sovereign issuers. Within duration positioning, the Fund’s exposure to Australian duration was a positive contributor, bucking the broader volatility in rates, and in the US, modest overall underperformance was offset by curve positioning.

The Fund made small changes to credit exposure over the month, favouring additions to Agency mortgage securities as historically wide spreads due to volatile rates markets, remain attractive. The Fund trimmed exposure to selected higher beta issuers that had performed strongly (such as International Consolidated Airlines) and added to mid-curve Australian corporates and selected new issuance, where we see specific opportunities. The Fund also participated in new Australian Residential Mortgage-Backed Securities (RMBS) issuance during the month, viewing spreads there as an attractive long-term source of carry. We continue to expect opportunities to add to credit positions over time – but at higher spread levels, given the likelihood of economic weakness in the medium term. In duration, the Fund trimmed approximately half of its Japan government bond short position, after the Bank of Japan relaxed their yield curve control policy somewhat and yields rose.

Performance Commentary - July 30, 2023

The Fund outperformed the benchmark over July, with credit positioning continuing its recent positive performance contributions. The Fund’s duration positioning also added value, with the Fund’s short positioning in Japan, as well as shorter end curve positioning globally (particularly short end AUD bonds), performing well despite overall benchmark global yields finishing the month higher. Amongst credit sectors, investment grade was a key contributor, as were emerging markets holdings, due to tighter spreads in all risk markets. Amongst individual issuers, Australian and global financials were amongst the largest contributors (Morgan Stanley, Westpac and NAB, amongst others), as the global banking sector rebounded strongly after lagging for several months. Amongst underperformers, AT&T modestly detracted, as reports of lead sheathing on some of the company’s legacy wireline network added uncertainty to the picture – we remain very comfortable with the long-term fundamentals of the issuer.

The Fund made small changes to credit exposure over the month, trimming emerging markets exposure and some specific credits as spreads approached 1-year tights. Additionally, the Fund added to shorter-dated global financials amidst new issuance and specific opportunities to maintain yield in an ongoing uncertain environment. The Fund also added credit downside protection via options, which we believe provides low-cost and positive-asymmetric protection for the portfolio, in the case of a meaningful sell-off in the coming months. The Fund also added to Agency MBS securities, with spreads on these sectors remaining at the upper end of historical ranges, which continue to offer attractive yields with very strong fundamental credit quality. We continue to expect opportunities to add to credit positions over time – but at higher spread levels, given the likelihood of economic weakness in the medium term.

Performance Commentary - May 31, 2023

The Fund underperformed the benchmark in May, driven by duration positioning. Credit positioning added value, even as credit spreads widened modestly. The Fund maintained an approximately 3-year duration position over the month, weighted to US denominated rates.

Bond yields globally sold off with lingering inflation, continued healing in financial markets after the turbulence in March, and some specific concerns around the US debt ceiling. Overall, 10-year Treasury yields rose by over 20bps for the month, and Australian 10-year bonds performed worse, rising by over 25bps. Credit positioning added value chiefly through protective option positions – these were removed mid-month amidst a weak market backdrop, locking in gains. Security selection within investment grade (IG) corporates and Emerging Markets also contributed positively.

The Fund made small changes to credit exposures during the month, adding exposure in European and Australian new issuance, with elevated overall spreads and some deals offering attractive concessions. The Fund added Australian utility Ausnet Services, and European insurer Allianz – all high-quality issuers with new bonds sold during the month. The Fund removed some high yield (HY) credit hedges in the first weeks of the month, with spreads at year-to-date wides (excluding the brief spell of volatility during March), banking profits as those positions were put in place at much tighter spreads in February. The Fund also further added to the US Agency Residential Mortgage-Backed Securities (which had begun from an initially zero base in late April): an asset class that had performed very poorly through 2022 and early 2023, and that now offers historically wide spreads. We continue to expect opportunities to add to credit positions over time – but at higher spread levels, given the likelihood of economic weakness or recession later this year. The Fund added modestly to duration mid-month, reflecting higher yields and our ongoing belief that bond yields at these levels reflect strong long-term value.

Performance Commentary - April 30, 2023

The Fund outperformed the benchmark in April, with both duration and credit positioning modestly contributing. This was reflective of smaller moves in both credit and bond markets month-on-month, despite still overall elevated volatility. USD duration positioning was a positive contributor, offset by Australian duration positioning, as the relative spread widened between these two markets. Amongst credit sectors, investment grade (IG) was the largest positive contributor, reflecting continued excess running yield. Most other credit segments provided very small impacts either way. Financials were the strongest sector performer this month, reflecting some rebound in overall sentiment, especially amongst larger US and Australian exposures, while higher beta emerging markets allocations (such as Egypt) were small detractors.

The Fund made modest adjustments to credit exposures during the month, slightly reducing exposure to European and US IG credit. Spreads in this sector, particularly outside financials, recovered much of their March weakness. As such, re-assessing credits such as Honeywell (a high-quality US industrial, but trading at one-year tights) and Celanese (a BBB- US chemical producer, also near one-year tights) was appropriate. The Fund also added downside protection in credit derivatives, to offer some offset if broad market weakness were to resume. The cost of option hedging, in particular, has fallen sharply as implied volatilities have reduced after the March volatility. The outlook continues to be uncertain and likely to be volatile. We continue to expect opportunities to add to credit positions over time, but at higher spread levels, given the likelihood of economic weakness or recession later this year. The Fund remains positioned with significant liquidity to take advantage of opportunities as they arise. We believe markets will continue to be volatile as we navigate the challenges of bringing inflation down, while trying to avoid overtightening policy. The Fund’s credit exposures overall are heavily weighted to IG, with small emerging markets and very modest high yield holdings. We think that best reflects the environment ahead and look forward to opportunities to add to higher beta sectors.

Performance Commentary - February 28, 2023

The Fund underperformed the benchmark over the month, with renewed pressure on global interest rates the key driver of the underperformance. The Fund’s credit positioning added value, with global investment grade credit and Australian Residential MortgageBacked Securities the key drivers of that contribution. Strong data releases in the US and Europe (as well as evidence of a deceleration in inflation improvement) impacted bond markets: in the US, for example, the peak rate Federal Reserve (Fed) rate priced by the market rose from 4.90%, to 5.41%, and long duration bonds followed suit. The Fund’s duration is weighted to Australia, and Australian duration materially outperformed global moves (yields rose less), though still rose overall. Credit markets overall were mixed, but the Fund’s positioning in higher quality credit added value: positioning in financials was key, which again outperformed the broader market.

Amongst individual credits, Australian and bank exposures were key positive contributors, as subordinated debt in the local market continued to perform well. US investment grade (IG) credit exposures were a detractor, with holdings of JP Morgan and Valero, a US refiner, giving up a portion of their recent impressive gains.

The Fund trimmed some higher beta European credits during the month (including a real estate investment trust (REIT) and a crossover rated industrial issuer) after strong performance. European credit still offers a spread pickup versus other global markets, but the rebound has been significant – with structural energy and inflation problems still lingering. The Fund also trimmed exposures to longer dated Australian corporates after significant spread tightening. Offsetting this, the Fund added short dated exposures in Australian banks and mortgage-backed securities, to maintain income in a lower volatility sector of the market.

The Fund added to duration positions over the month as yields renewed their sell-off: the Fund added short dated Australian duration, underscoring our view that short rates in Australia are attractive, and that the impact of the Reserve Bank of Australia rate hikes is beginning to have a slowing impact on the economy.

We continue to view the moves in bond markets as offering opportunities to add to both credit and duration positions over time – but at higher yield levels, particularly in credit, where spreads are now inside long-term averages and are not realistically discounting the possibility of economic weakness or recession later this year. The Fund remains positioned with significant liquidity to take advantage of opportunities – we believe markets will continue to be volatile as we navigate the challenges of bringing inflation down, while trying to avoid overtightening policy. The Fund’s credit exposures overall are heavily weighted to investment grade, with small emerging markets and very modest high yield holdings. We think that best reflects the environment looking ahead and look forward to opportunities to add to higher beta sectors.

Performance Commentary - December 31, 2022

The Fund underperformed the benchmark over the month, with detraction from duration positioning offsetting positive credit contributions. Fixed income markets finished the year mixed: high quality credit spreads were modestly tighter, but government bond yields were higher in the final weeks of the year after the Bank of Japan (BoJ) adjusted their yield curve control settings, against an illiquid market backdrop. The Fund’s overweight position in AUD duration detracted, though this was offset by a short position in Japanese bonds, intended to offset the impact of this kind of unexpected adjustment from the BoJ. Credit positioning added value: investment grade credit benefitted from tighter spreads and increases in allocations made over the last several months, and emerging markets were also positive. The largest industry sector contributions were from financials, transportation, and capital goods.

Key individual names contributing to the credit result again included major financial issuers, such as bonds issued by US banks Morgan Stanley, as well as subordinated debt from Australian major banks. Fundamentally strong issuers (such as Holcim and Honeywell) denominated in EUR also added to the result, as that market continued to move back from the extreme wides reached in mid-October. Underperformers included Aroundtown, a European REIT, and Warner Bros Discovery: hit by continued elevated integration costs as the issuer moves to get the costs of its streaming content down to an appropriate level.

The Fund generally maintained its credit positioning over the month, adding small exposures in shorter dated bonds offering attractive yields, but less exposed to credit spread and bond market volatility. The Fund’s duration position was trimmed during the month after a rally in yields, mostly in the US. We continue to view the moves in bond markets as offering opportunities to add to both credit and duration positions over time – but at higher yield levels, particularly in credit, where spreads are now only at long term averages despite the more difficult economic outlook. The Fund remains positioned with significant liquidity to take advantage of opportunities – we believe markets will continue to be volatile as we navigate the challenges of bringing inflation down, while trying to avoid a material growth slowdown. The Fund’s credit exposures overall are heavily weighted to investment grade, with small emerging markets and very modest high yield holdings. We think that best reflects the environment looking ahead and look forward to opportunities to add to higher beta sectors.

Performance Commentary - November 30, 2022

The Fund outperformed the benchmark over the month, with positive contributions from both duration and credit positioning. A better than expected US consumer price index print was a trigger for significant repricing across markets, which benefited positioning. Amongst credit sectors, emerging markets and investment grade credit were the strongest contributors: investment grade credit spreads were the best (volatility-adjusted) sector across global markets, and are the largest weight in the Fund – a position that has been added to over previous quarters. Duration positioning also added value, with global developed market bond markets rallying sharply. Holdings of AUD and USD interest rate duration strongly contributed to the month’s result.

Key individual names contributing to the credit result included senior bonds issued by US banks Morgan Stanley, Bank of America, and JP Morgan, which had widened consistently all year and had been gradually added to the Fund, reflecting our view that fundamentals in this sector were very strong, and the spread widening was more technical in nature. Recent additions in Euro also strongly contributed: the focus had been adding names less impacted by Europe’s slowing economy, but that had been dragged wider by the broader market. Additions in Euro-denominated bonds issued by PPG (US-based industrial coatings) and Allianz (insurance), are two examples. Underperformers included a small number of high yield holdings, such as Occidental Petroleum – the high yield market rebounded early, but had a much more mixed November. The high yield sector is only a small allocation, given our view that spreads here do not compensate for the uncertain environment.

The Fund made small further additions to investment grade credit in the first half of the month but paused buying and moved to small position trims into the end of the month, reflecting tighter spreads and lower new issuance concessions. No material changes were made to duration positions over the month. The Fund remains positioned with significant liquidity to take advantage of opportunities – we believe markets will continue to be volatile as we navigate the challenges of bringing inflation down, while trying to avoid a material growth slowdown. The Fund’s credit exposures overall are heavily weighted to investment grade, with small emerging markets and very modest high yield holdings. This positioning reflects our outlook for the environment ahead.

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