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Antares Income Fund - Monthly Investment Report April 2017

The Antares Income Fund aims to provide investors with a regular income and a return (after fees) that exceeds the Bloomberg AusBond Bank Bill Index over rolling three year
periods.

Highlights for the month

Performance
The Fund underperformed the benchmark by 1bps after fees for the month of April.

Contributors to performance (relative to the benchmark)
A solid contributor to the Fund’s excess return was the additional yield earned from the high quality investment grade securities held by the Fund.
A widening of the credit spreads of banks, detracted from the excess return.

Fund Activity
The Fund extended exposure to the offshore banks by switching shorter Wells Fargo 2019 into a longer Wells Fargo 2022.

Portfolio Outlook
Global growth perceptions are becoming more mixed with Europe and Japan maintaining strong growth momentum while the US and China have had slower Q1’s.
On the risk side there have been positive developments:

  • The French election produced a convincing win by Emanuel Macron who is pro globalisation and pro Europe. He has also proposed some steep economic reforms. However many previous reform agendas have been poleaxed by the French trade unions, so these reforms remain a major challenge.
  • Mr Trump has shown his deal making credentials by pivoting from Russia to China as America’s best friend. In the process the US has been silent over the South China Sea and China’s trade and currency relationship with the US. In return China has taken a much firmer line with North Korea. These developments are particularly positive for Australia reflecting a pragmatic compromise between our major trading partner and our key alliance partner.
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