Daintree Capital (Daintree), a specialist Australian active fixed income manager and part of the Perennial Group, has been upgraded to a “Recommended” rating by Lonsec 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 $380 million for investors.
The investment philosophy centres 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.
Commenting on the Fund’s performance and track record, Lonsec said: “Over the three-year period to August 2020, the Trust’s return of 2.8% p.a. exceeded the outperformance target of 1.5%-2% and outperformed the Lonsec peer group. Pleasingly the returns were also generated at significantly lower volatility as measured by the standard deviation of returns than the Lonsec peer group.
“Lonsec believes the Trust, having recently achieved a three-year track record, has been true to label, acting in accordance with its investment philosophy which focuses on capital preservation.”
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, Lonsec said, “Mitchell and Tyler are well experienced with their respective specialist areas and complimentary in holistically managing the portfolio. The investment team’s alignment of interest with investors is strong, driven by the 50% equity ownership by Mitchell and Tyler and co-investments by all the investment team members. Furthermore, the team is backed by Perennial Partners, an established entity in the domestic equities market, mitigating risk and driving business growth and opportunity.”
Daintree Co-Founder and Director, Mark Mitchell, said: “Fixed income markets have changed dramatically in recent times and investors can no longer afford to ‘set and forget’. The RBA has announced a record low interest rate of 0.10%, mirrored by central banks around the world, 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 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. We also view ESG integration as integral to quality investment analysis and managing risk, which is why the team employs thorough research, screening out ten harmful, negative sectors.
“The Daintree team is excited to receive an upgrade to Recommended for our Core Fund, a testament to our true-to-label, specialist approach,” Mr Tyler said.
Daintree’s Core Income Fund also received a “Recommended” rating through Zenith Investment Partners, while its High Income Trust received an “Approved” rating by Zenith. Daintree was also named a Finalist in Zenith’s Rising Star Awards last month.
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.
