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Fixed Income

Daintree Capital Core Income Fund rated “Recommended” by Zenith

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Daintree Capital (Daintree), a specialist Australian active fixed income manager and part of the Perennial Group, has been upgraded to a “Recommended” rating by Zenith Investment Partners for its Core Income Fund (the Fund).

The Fund employs an absolute return investment approach, aiming to outperform the RBA cash rate by a net margin of 1.5% p.a. to 2% p.a. over rolling three-year investment terms, while delivering investors a steady income stream and focusing on capital preservation.

Daintree was established in 2017 and actively manages approximately $300 million for investors.

The investment philosophy is centred on the belief that markets are not fully efficient, with asset values, at times, driven by irrational influences. To navigate this, Daintree employs both a top-down and bottom up approach, focusing on absolute return orientation, mandate flexibility, and emphasis on coupon income.

In its report Zenith commented, “Daintree has significantly improved its security selection process, combining a range of propriety quantitative models and technology that aids in the systematic aggregation of market-based data and third-party information.

“Daintree’s fair value approach provides a solid foundation upon which an issuer’s credit policy and spread margins can be assessed. Ultimately, Zenith considers this an efficient mechanism for narrowing the Fund’s investible universe and identifying mispriced opportunities,” Zenith said.

Daintree is co-founded and managed by Mark Mitchell, responsible for credit investments, and Justin Tyler, who specialises in interest rates and currency. Mitchell and Tyler are supported by a team of fixed income experts.

Commenting on the team, Zenith said, “Mitchell and Tyler have complimentary skills and contribute unique perspectives to the investment process. Furthermore, we believe the combination share a similar set of investment beliefs, which is evident in their collaborative approach to portfolio management.”

Daintree Co-Founder and Director, Mark Mitchell, said: “Fixed income markets have changed dramatically in recent times. Interest rates are at historic lows resulting in limited genuinely defensive income generation options available for fixed income investors. The multi-decade rally in government bond yields has likely come to an end so investors need other options for this portion of their portfolio. The days of just “set and forget” by owning simple long duration fixed income assets have likely come to an end.”

Justin Tyler, Daintree Co-Founder and Director, added: “Quality investment analysis, risk management, and diversification are crucial in fixed income, which is why we believe in an active approach aligned to investors goals and risk appetite. The Daintree team are excited to receive an upgrade to ‘Recommended’ for our Core Fund, a testament to the true-to-label, specialist approach of our team.”

Daintree’s High Income Trust also received an “Approved” rating in May this year through Zenith Investment Partners.

Disclaimer: Please note that these are the views of the writer and not necessarily the views of Daintree Capital. This article does not take into account your investment objectives, particular needs or financial situation.