Yarra Income Plus Fund aims to provide regular income and to achieve medium term capital growth through exposure to cash, money market products, domestic fixed interest and a range of high yielding investments, including domestic hybrid investments, property, infrastructure and utilities securities and international fixed interest assets. In doing so, the Fund seeks to outperform the Bloomberg Ausbond Bank Bill Index over rolling three-year periods. The Fund has exposure to a range of assets including hybrid investments, floating rate credit investment, property, infrastructure and utilities securities, government bonds, corporate and high yield debt products, and cash and cash equivalents.
The Yarra Income Plus Fund returned 0.37% (net basis) over the September quarter, underperforming the Bloomberg AusBond Bank Bill Index by 71 bps.
Diversified Credit and Hybrid sleeves contributed meaningfully to performance. Strong carry, particularly in the credit sleeve underpinned strong quarterly performance. Some tightening of spreads over the quarter helped provide modest price return. The Fixed Income sleeve was weaker over the period but positive, nonetheless. Carry again proved to be a significant contributor to performance during the quarter but movement in the yield curve did have a negative impact on price performance.
Performance in the Real Assets sleeve was negative, reflecting a shift in sentiment that has caused a sell-off in the REIT sector. This was the only sleeve detracting from performance. During the quarter, weights were adjusted as we looked to reduce our position in bonds. With spreads are still attractive in hybrids, we elected to reduce our underweight position and decrease our underweight cash position as we sought other opportunities. We also selectively increased our position in REITs.
What is Yarra Income Plus Fund Yarra Income Plus Fund is an Managed Funds investment product that is benchmarked against Multi-Asset Growth Investor Index and sits inside the Multi-Asset - Multi-Asset Income 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 Yarra Income Plus Fund has Assets Under Management of 89.11 M with a management fee of 0.68%, a performance fee of 0 and a buy/sell spread fee of 0.21%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Yarra Income Plus Fund has returned 2.52% in the last month. The previous three years have returned 2.77% annualised and 3.44% each year since inception, which is when the Yarra Income Plus Fund 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 Yarra Income Plus Fund first started, the Sharpe ratio is 0.52 with an annualised volatility of 3.44%. The maximum drawdown of the investment product in the last 12 months is -1.88% and -7.84% 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 Yarra Income Plus Fund has a 12-month excess return when compared to the Multi-Asset - Multi-Asset Income Index of -0.19% and 0.21% 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. Yarra Income Plus Fund has produced Alpha over the Multi-Asset - Multi-Asset Income Index of 0.07% in the last 12 months and 0.06% since inception.
What are similar investment products? For a full list of investment products in the Multi-Asset - Multi-Asset Income Index category, you can click here for the Peer Investment Report.
What level of diversification will Yarra Income Plus Fund provide? Yarra Income Plus Fund has a correlation coefficient of 0.9 and a beta of 0.7 when compared to the Multi-Asset - Multi-Asset Income 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 Yarra Income Plus Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Yarra Income Plus Fund with the Multi-Asset Growth Investor Index? For a full quantitative report on Yarra Income Plus Fund compared to the Multi-Asset Growth Investor Index, you can click here.
Can I sort and compare the Yarra Income Plus Fund to do my own analysis? To sort and compare the Yarra Income Plus Fund financial metrics, please refer to the table above.
Has the Yarra Income Plus Fund 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.
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Performance Commentary - June 30, 2023 The Yarra Income Plus Fund returned 0.15% (net basis) over the June quarter, underperforming the Bloomberg AusBond Bank Bill Index by 75 bps. Performance in the Real Assets sleeve was positive, with a shift in sentiment offset selling in long-duration assets which helped to support the position. Diversified Credit and Hybrid sleeves also contributed meaningfully to performance. Running yield has provided a significant tailwind, comfortably offsetting a modest widening of spreads. We expect this thematic to persist for some time given the large increase in cash rates. The Fixed Income sleeve was weak over the period. Bond markets priced in another round of rate hikes across global central banks, pushing yields significantly higher.
Selling in the sleeve is making future opportunities increasingly compelling. No changes were made to the Fund’s tactical asset allocation during the quarter. We continue to hold conviction in our overweight Fixed Income position, confident that duration will come back into favour.
Performance Commentary - March 31, 2023 The Yarra Income Plus Fund returned 2.63% (net basis) over the March quarter, outperforming the Bloomberg AusBond Bank Bill Index by 184 bps.
Performance in the Real Assets sleeve was positive. A shift in sentiment led to a broad-based rally benefitting the sleeve.
Diversified Credit was also a strong contributor. Elevated levels of carry continue to underpin positive performance. Running yield remains at an attractive level, and will continue to provide strong downside protection for some time.
The Fixed Income sleeve performed well over the quarter.
Issues in the global banking sector led investors to price an impending rate cutting cycle. As such, long duration securities performed very well. Despite the rally, the yield on offer in the sleeve continues to look attractive.
No changes were made to the Fund’s tactical asset allocation during the quarter. We continue to hold conviction in our overweight Fixed Income as it seems duration has further to rally.
Performance Commentary - December 31, 2022 The Yarra Income Plus Fund returned 2.54% (net basis) over the December quarter, outperforming the Bloomberg AusBond Bank Bill Index by 180 bps. A number of changes were made to the Fund’s tactical asset allocation during the period. Early in the quarter we moved underweight Hybrids in favour of Property, Infrastructure and Utilities. The moved proved favourable as risk sentiment improved early in the quarter. Following the risk rally, we moved from overweight back to neutral Property, Infrastructure and Utilities and reduced our underweight position in cash. Performance from the Real Assets sleeve was positive over the quarter.
Weak economic data led markets participants to position for a possible central bank pivot. As such, equity markets performed well over the period. Diversified Credit also contributed positively to performance. Tightening spreads and elevated levels of carry drove strong returns. Running yield remains at high levels and is offering significant downside protection. The Fixed Income sleeve also contributed positively to performance, despite yields trading wider over the period. Offsetting weakness from wider yields was the sleeve’s running yield, which remains attractive. The Reserve Bank of Australia (RBA) raised the cash rate a cumulative 75 bps over the quarter, taking the cash rate to 3.10%. The Cash sleeve is now presenting more attractive yield; however, we still see better value in other sleeves at our disposal.
Performance Commentary - September 30, 2022 The Yarra Income Plus Fund returned -0.84% (net basis) over the September quarter, underperforming the Bloomberg AusBond Bank Bill Index by 127 bps. On a 12-month view, the Fund returned -3.79%, underperforming its benchmark by 431 bps on a net basis. We made a number of changes to the Fund’s tactical asset allocation during the quarter. We further reduced our cash allocation moving further overweight Fixed Income and Diversified Credit where outright yield have become increasingly compelling. Duration sold-off yet again leading to weak performance within the Real Assets sleeve. The sleeve underperformed the broader market during the period. Diversified Credit was a strong contributor to performance during the quarter. Spreads were relatively flat over the period, performance was instead driven by strong running yield. Wide spreads and strong underling yield continue to provide attractive carry.
Performance Commentary - August 31, 2022 The Yarra Income Plus Fund returned -0.73% (net basis) in August, underperforming the Bloomberg AusBond Bank Bill Index by 89 bps. No changes were made to the Fund’s target asset allocation during the month. We remain comfortable in our overweight to Fixed Income following the significant sell-off in duration, and remain underweight Cash given the better relative return in sleeves such as Diversified Credit. Our neutral position in Real Assets and Hybrids was unchanged.
Performance Commentary - June 30, 2022 The Yarra Income Plus Fund returned -1.08% (net basis) over the June quarter, underperforming the Bloomberg AusBond Bank Bill Index by 113 bps. On a 12-month view, the Fund returned -2.12%, underperforming its benchmark by 222 bps on a net basis. We made a number of changes to the Fund’s tactical asset allocation during the quarter. We reduced our allocation to Cash and Hybrid sleeves in favour of the longer duration Fixed Interest sleeve.
We remained neutral Real Assets and overweight Diversified Credit. The Real Assets sleeve detracted from performance. The sleeve underperformed the broader market as long duration assets were heavily sold off. Exacerbating negative returns was weakened risk sentiment. Diversified Credit also detracted from performance, with elevated investor risk aversion driving a widening in credit spreads.
With the underlying yield moving far higher and credit spreads wider, the risk-return dynamics may be looking increasingly attractive. Long duration assets sold off significantly on persistent inflation pressures and hawkish central bank commentary. As such, the Fixed Income sleeve was a large detractor from performance. The Reserve Bank of Australia (RBA) began hiking rates at its May meeting with a 25 bps rise, followed by another 50 bps in June, taking the cash rate to 0.85%. Several more hikes to follow between now and year-end appear inevitable. At this stage we still see better value across the other sleeves at the Fund’s disposal.
Performance Commentary - March 31, 2022 The Yarra Income Plus Fund returned -1.72% (net basis) over the December quarter, underperforming the Bloomberg AusBond Bank Bill Index by 173 bps. On a 12-month view, the Fund returned 1.81%, outperforming its benchmark by 177 bps on a net basis. No changes were made to the Fund’s asset allocation during the quarter.
Russia’s invasion of Ukraine added further pressure to inflationary woes. As such, the Fixed Income sleeve was the largest detractor from performance. Given how much yields have sold off, we believe the sleeve is beginning to offer some compelling value.
The Real Assets sleeve detracted from performance during the quarter, with weaker risk tolerance and rising yields weighing on performance. Real Assets tend to trade lower in the context of rising real yields which we have started to observe.
The Hybrid sleeve was slightly weaker over the quarter. Despite strong market liquidity and relatively few new deals, hybrids traded lower during the period. Outright yields in the sleeve pushed far higher as yields moved up.
Diversified Credit detracted as spreads softened. Demand for high quality corporate names remains robust, particularly at the long end where the level of outright yield is becoming increasingly compelling.
It appears increasingly likely that the Reserve Bank of Australia (RBA) will lift rates in June 2022. While this will lift the yield on offer in the cash sleeve, at this point in time we see better value across other asset classes
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