Hybrid Income Fund

Hybrid Income Fund

Current Unit Price (as at 30 June 2024): $1.0678 (ex distribution)
Unit pricing: Weekly
Distributions: Quarterly
APIR Code: EVO3184AU
Fees: The management fee is 0.70%. There is no performance fee.

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The Hybrid Income Fund (HIF) Information:

The Hybrid Income Fund strategy was established in September 2015.

Hybrid Income Fund (HIF) actively invests in a diversified portfolio of financial capital with a heavy weighting to Australian-regulated capital instruments. The underlying securities include hybrids (Tier 1 capital notes and convertible preference shares), Tier 2 bonds, subordinated debt, senior debt, mutual capital instruments and cash. The Fund typically holds ~40 positions whose underlying issuers are banks, insurance companies and non-bank lenders.

Fund Objective:

HIF aims to provide returns that exceed the hybrid benchmark on a net basis. The Strategy has a meaningful track record of exceeding its target after fees through active management with low volatility and access to franking credits.

HIF Strategy Performance Table 
FIGURE 1. (as at 30 June 2024)

1 Month

3 Months

6 Months

1 Year

3 Years
Annualised

5 Years
Annualised

SI (Sep 15)
Annualised

HYBRID INCOME FUND STRATEGY

0.61%

1.86%

3.83%

8.52%

5.46%

4.71%

6.33%

Hybrid Benchmark (Solactive Australian Hybrid Index (net))

0.97%

1.43%

3.41%

6.96%

3.81%

3.62%

4.76%

RBA Cash Rate

0.36%

1.09%

2.19%

4.35%

2.48%

1.65%

1.63%

The performance table above represents The Hybrid Income Fund Strategy (“Strategy”). The Strategy commenced in September 2015 and has been continuously operated with identical investment parameters and processes by its portfolio manager, Nicholas Chaplin. The Strategy began in 2015 as the Paraclete Investment Fund until June 2022. The Hybrid Income Fund commenced in June 2022 operating under Evolution Trustees as trustee. Investment management services were novated to Seed Funds Management in March 2024. Performance figures for the Strategy have been reviewed in accordance with ASRS 4400 “Agreed-Upon Procedures Engagements” by Hall Chadwick Corporate (NSW) Limited.

The Hybrid Market

The listed hybrid market includes issues totalling approximately $45 billion across a broad range of financial and corporate issuers. In focusing on the financial issuers in this market, over 90% of listed hybrid issuers will be available for investment. Additional diversity will be achieved via investment in senior bonds, hybrid capital issues and subordinated bonds issued by banks, insurers and other financial entities, and cash.

The Investment Strategy

The investment manager intends to apply a tactical approach in terms of which securities it invests in and the timing of such investments with a focus on delivering a robust risk adjusted yield through market and interest rate cycles.

The investment manager will:

  • Manage interest rate risk by holding predominantly floating rate instruments;
  • Provide portfolio diversity by security type, credit risk, duration and issuer;
  • Aim to distribute franking credits;
  • Aim to provide regular income.

Expert Management

Access to highly skilled specialist management, with extensive experience in regulated capital products including hybrids, subordinated debt, and mutual equity.

Nicholas Chaplin Fund Manager

Senior Portfolio Manager:

Nicholas Chaplin is an authority in the Hybrid and capital issuance market having structured, originated, distributed, and educated on many issues since 1998.

Over his career he has originated over $200 billion in hybrid & capital issues. From 2009 to 2021, Nick was Head of Hybrid & Structured Capital at NAB and prior to that he was Head of Hybrid Origination at Westpac.

GENERAL DISCLOSURE: The material contained within this website about the Hybrid Income Fund (“Fund”) has been prepared and is issued by Seed Funds Management Pty Ltd (ABN 25 675 247 506) and is a corporate authorised representative (No.001308397) of its related body corporate, Seed Partnerships the holder of AFSL No.492973. The website is not intended to provide advice to investors or take into account an individual’s financial circumstances or investment objectives. This is general investment advice only and does not constitute advice to any person. Neither Manager nor the Fund’s trustee (Evolution Trustees Limited ACN 611 839 519, AFSL No 486217 (“Evolution”)) guarantee repayment of capital or any rate of return from the Fund. Neither Evolution nor the Manager gives any representation or warranty as to the reliability, completeness or accuracy of the information contained in this website. Investors should consult their financial adviser in relation to any material within this document. Past performance is not a reliable indicator of future performance. Investors should consider any offer document of the Fund and any other material published by the Manager or Evolution in deciding whether to acquire units in the Fund.

^FUNDMONITORS FACTORS DISCLAIMER: The “tick logo” is provided by Australian Fund Monitors Pty Ltd (ACN 122226724, AFSL 324476) and is based on the FACTORS Report that was prepared in accordance with ASIC’s RG79 and contains general financial advice for wholesale and sophisticated investors and AFSL licensees. Recipients should consider their own financial circumstances and objectives prior to making any investment decision. No part of the report may be reproduced without permission. The content is updated monthly and only the current version should be used. For further information on the FACTORS research process please visit www.fundmonitors.com. Past returns do not indicate future performance.