Diversified Hi Yield Fund

Fund at a glance

Fund aim

The Fund gains exposure to a wide range of Australian and international fixed interest related assets (cash and bonds) and is actively managed in line with the following strategic benchmarks:

• 50% Australian Bonds
• 50% International Bonds

Australian and international bonds may include, but are not restricted to, sovereign debt, corporate debt, emerging market debt, inflation indexed securities, high yielding securities, mortgage and asset backed securities, converting preference shares and infrastructure debt.

Investment objective

The investment objective is to provide investors with a total annual return (after costs and before tax) higher than the UBS Composite Bond Index on a rolling 12 months basis.

Benchmark

The benchmark is a combination of the UBSA Fixed Interest Index (50%) and the Citigroup World Government Bond Index hedged back to Australian dollars (50%).

Investment Style

• Cash - we primarily utilise duration management along with credit analysis with the aim of providing an enhanced cash return.
• Australian Government Bonds - we analyse economic and technical factors to determine a strategic (longer-term) and
  tactical (short-term) outlook for the direction of interest rates to adjust the fund's holdings of Australian Government bonds.
• Australian Corporate Bonds - We aim to construct a portfolio that is diversified by industry and issuer, and rotate the portfolio
  according to economic factors and their impact on specific industry groups and credit yields.
• Australian High Yield Securities – we aim to invest in a diversified portfolio of high yielding debt assets and focus on investments that hold either a natural monopoly or strong industry position.
• International and Emerging Market Bonds - we adopt a value-driven approach, overweighting cheap assets and underweighting expensive assets. This involves management of the country, currency, duration and credit risks.

Inception date

6 March 1998

Recommended investment timeframe

Minimum 3-4 years

Risk Rating

Low-Medium

Distributions

Quarterly and can be paid in cash or re-invested in the fund

Hedging

Exposure to global securities will normally be unhedged.

Minimum investment

A$500,000

Buy/sell spread

Nil

MER

0.4295%