Author: Aayushi Swami

Fund Objective

The Fund aims to provide exposure to global credit markets and to generate income with some potential for capital growth over the medium to long term. The Fund aims to outperform its composite benchmark over the suggested minimum investment timeframe.

Fund Strategy

The Fund is actively managed and focused on generating stable investment income by providing a diversified exposure to domestic and global credit markets while managing interest rate risk and currency risk. Bentham seeks to add value through actively managing asset allocations across different credit sectors, trading individual securities and managing its interest rate and currency risk. Bentham manages the Fund on a top-down basis.

Approach

Bentham Global Income holds a range of investments, including Australian and global hybrids, high-yield debt, investment-grade credit, collateralised loan obligations, and cash. Although not currently utilized, Aberdeen Asset Management manages a European convertible component from London. At least 50% of securities must be investment-grade, while Bentham can short credit to a maximum of 35%. Duration is actively managed and usually below the Bloomberg Ausbond Composite Bond Index; it may even be negative. Bentham’s investment in risk-monitoring systems is important in keeping tabs on the array of complex instruments held and the resulting credit and currency exposures.

Portfolio 

The strategy offers a diverse range of fixed-interest asset classes, with the asset mix varying greatly since inception. Syndicated loans (42%), cash (14%), CLOs (12%), and bank capital securities (16%) were the four largest allocations as of October 2021. Capital securities and corporate investment-grade were the largest gainers over the past year at 3.1% and 4.7%, respectively. 

People 

Encouragingly, Bentham retains a formal connection to Credit Suisse’s Credit Investments Group, one of the most deeply resourced groups in the market. This provides welcome global information sharing and asset selection, especially in the loan space. Nik Persic is the other key person and now has 16 years of working with Quin after joining Credit Suisse in 2005 from Commonwealth Bank of Australia, where he held roles in equity capital markets and institutional research.

Performance

Long-term performance has been excellent, despite the contrarian duration positioning in 2014-16. A prolonged negative duration call was an anchor on performance before Bentham aggressively reversed it during 2019. The year 2020 has enabled the team to highlight its flexibility, rotating its portfolio significantly whilst also trading high levels of credit default swap hedges–an almost 2% contribution. Synthetic credit delivered a similar benefit. Loans unsurprisingly have been the backbone of the strategy, delivering solid long-term performance with almost all physical credit being additive over three, five, and seven years.

(Source: Morningstar)

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.