Supervised Global Income Fund
(previously the Supervised High Yield Fund) ARSN 600 244 102
The Supervised Global Income Fund ARSN 600 244 102 (Fund), aims to provide returns through investing in a portfolio of debt securities and derivatives.
The Investment Manager will invest within the global and domestic debt markets. These investments may include but are not restricted to debt instruments such as government treasury bonds, corporate bonds, bank bills, commercial paper, bank loans, mortgage backed securities, asset backed securities, mortgages, secured corporate loans, discounted bills, repurchase agreements and debt/equity hybrid securities, forward foreign exchange agreements, interest rate futures, options and interest rate swaps.
The Investment Manager does not intend to borrow or use leverage in the Fund.
Derivatives (i.e. exchange traded derivatives and over the counter derivatives) may be used in any or all of the following ways:
- Using exchange traded or over the counter derivatives for hedging foreign exchange risk, credit risk and interest rate risk.
- Using exchange traded derivatives for investment purposes, if the Investment Manager believes that the derivative is of better relative value than the physical underlying asset it is linked to.
- Using exchange traded derivatives where possible for the purpose of hedging market risk, market price volatility risk and interest rate risk in the Fund.
Where the Fund uses derivatives, the Investment Manager will aim to ensure that there are sufficient liquid assets available in the Fund to meet costs and other liabilities under derivatives (that is, while a derivative may turn out to be loss making, it will aim to keep sufficient liquid assets in the Fund to meet such losses).
The Investment Manager aims to outperform the Benchmark (Bloomberg AusBond Bank Bill Index plus 250 basis points). The Benchmark objective is not a forecast. It is merely an indication of what the Fund aims to achieve over the medium term on the assumption that debt and credit markets remain relatively stable throughout the investment timeframe referred to above. The Fund may not be successful in meeting the Benchmark objective. Returns are not guaranteed.
The Investment Manager, Supervised Investment Australia Limited (ABN 45 125 580 305 AFSL 317155), will invest within the debt and derivatives markets only after identifying opportunities using the Fund’s investment process.
The investment process can be summarised as a top down analysis of the economic environment and available marketable securities. This analysis identifies the economic outlook and the investment opportunities that exist within the universe of debt securities. Using this research, investment opportunities are identified and an expected returns measure for each of these opportunities is calculated. The investment opportunities are ranked from highest to lowest returns. These opportunities are then individually subjected to a historical worst case scenario stress testing. A measure of acceptable risk is thus determined and the investment opportunities are again ranked from highest to lowest risk. The returns measure is then combined with the risk measure for each investment opportunity and a returns to risk measure value is calculated for each security enabling the fund manager to rank investment opportunities from the most attractive return/risk ratio to least attractive return/risk ratio. The most attractive return/risk ratio investments are then selected for the Fund’s investment portfolio. This process is then reviewed and repeated on a quarterly basis in an effort to continually identify the optimum portfolio structure that maximises returns whilst minimising risk. By following this approach, the Fund aims to achieve positive returns and exceed the Benchmark.