Our Opinion…
- Well-resourced, capable and experienced investment team. We regard the CIO and investment team of Altius as very experienced and capable investment managers.
- We like the total return focus, to protect capital in a rising yield environment. The Manager has an absolute return focus and is looking to protect capital in a rising interest rate environment. Whilst global rates are likely to be lower for longer, a specialist manager that can adequately navigate this risk is highly desirable.
- Being benchmark unaware requires conviction. We agree that most managers will look to manage their portfolios relative to a benchmark, which leads to risk managed on a relative basis (rather than absolute) and foregoing opportunities to drive alpha. This is where we expect Altius’ investment team to exercise significant investment experience and investment process to deliver superior returns.
- Scenario analysis critical to the investment process. In our view, the key component of the investment process is the scenario analysis forecasting and building a case for Best Case, Central Case and Worst Case. Putting a well thought-out and researched narrative around each case allows the investment team to answer critical questions and define the macro economic landscape. In our discussions with the team, we broadly agree with their current view under each case and analysis to support it. Whilst agreeing to their view is not so important to us, what we appreciate is the analysis (and logic) and how the narrative was articulated to us. We believe the Manager understands the market and critical drivers.
- Focus on liquidity management. The Manager embeds risk management in strategy formulation, with the liquidity risk being a key consideration during the security selection process and managed through a 10% buffer of cash-like assets, giving the fund some downside protection from impaired liquidity when credit cycles turn.
| Main Details | |
| APIR Code | WFS0486AU |
| Asset Class | Australian Fixed Interest |
| Inception date | 14 June 2011 |
| Style | Absolute Return |
| Fund Size | $133.39m |
| Fees (MER) | 0.46% p.a. + expense recovery |
| Distribution | Quarterly |
| Portfolio Characteristics | |
| Benchmark | 50% Bloomberg AusBond Composite (0+Y) + 50% RBA Cash Rate |
| Yield to maturity (%) | 1.17 (versus 0.58 benchmark) |
| Modified duration (years) | 1.91 (versus 3.02 benchmark) |
Downside Risks…
- Interest rate risk (however the Fund’s total return focus should limit this).
- The Manager gets the thematic and top down view wrong.
- Key man risk – Bill Bovingdon, Chris Dickman and Gavin Goodhand.
- Key man risk – Bill Bovingdon, Chris Dickman and Gavin Goodhand.
Source: Altius Asset Management
Fund Performance
Figure 1: Altius Bond Fund historical performance (as at 30 June 2021)
| (%) | Fund | Benchmark** | Out-performance |
| 1-month | -0.16 | +0.35 | -0.51 |
| 3-months | +0.38 | +0.77 | -0.39 |
| 1-year (p.a.) | -0.48 | -0.32 | -0.16 |
| 3-years (p.a.) | +1.53 | +2.49 | -0.96 |
| 5-year (p.a.) | +1.66 | +2.13 | -0.47 |
| 7-year (p.a.) | +2.27 | +2.73 | -0.46 |
| 10-year (p.a.) | +3.53 | +3.45 | +0.08 |
| Since inception (p.a.)* | +3.54 | +3.46 | +0.08 |
Source: Altius Asset Management; Past performance is not an indicator for future performance. * Inception date for performance calculations is 14 June 2011. ** Effective 1 July 2016, Benchmark is 50% Reserve Bank of Australia Cash Rate and 50% Bloomberg AusBond Composite 0+Yr Index and applied retrospectively for all periods.
Fund Positioning
Figure 2: Fund sector allocation (as at 30 June 2021)
| Fund % | Benchmark % | |
| Australian Commonwealth Government | 6.44 | 28.65 |
| Supranational | 15.06 | 4.63 |
| Industrials | 17.06 | 2.08 |
| Financials | 18.63 | 1.50 |
| Asset Backed | 9.62 | 0.00 |
| Agencies | 10.59 | 0.14 |
| 11am | 0.97 | 0.00 |
| Cash at Bank | 0.69 | 0.00 |
| RBA Cash | 0.00 | 50.00 |
| Semi Government | 20.95 | 13.00 |
Source: Altius Asset Management
Figure 3: Top 10 holdings (as at 30 June 2021)
| Fund % | Benchmark % | |
| New South Wales Treasury Corp | 11.13 | 3.09 |
| National Housing Finance & Investment Corp | 10.60 | 0.05 |
| Australian Commonwealth Government | 6.44 | 28.25 |
| Asian Development Bank | 4.94 | 0.40 |
| Treasury Corp Victoria | 4.34 | 2.78 |
| Queensland Treasury Corp | 3.28 | 3.09 |
| Inter-American Development Bank | 3.22 | 0.33 |
| UBS Ag Australia | 2.92 | 0.04 |
| Intl Bank Reconstruction & Development | 2.21 | 0.35 |
| McDonalds Corp | 1.89 | 0.00 |
Source: Altius Asset Management
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.
