Apostle Funds Management (AFM) has announced an expansion to its range of ethical and impact strategies with the launch of the firm's first ethically screened high yield credit fund.
The Apostle Ethical High Yield Credit Fund is focused on generating stable income alongside capital preservation and is designed by AFM to be an “all-weather fund” that can adjust to the interest rate and inflationary environment.
It provides exposure to US alternative fixed income assets for wholesale investors by investing in experienced managers that AFM said have strong track records in niche areas including liquid infrastructure credit and private real estate debt.
The fund has a target yield of 5 to 7 per cent net of fees p.a. over rolling five-year periods and is daily priced, liquid and hedged into AUD.
AFM portfolio manager, Steven Spearing, suggested that the fixed income asset class is well positioned to provide investors with stability and capital preservation.
“There are good quality sub-investment grade bonds trading at historically cheap levels, and we see this as a fantastic opportunity to be entering the market with a new credit fund,” he said.
“The fund can navigate a variety of market conditions using a mix of fixed and floating rate instruments, and a mix of high-yield fixed income assets (loans, bonds, private credit). Expected returns are in line with the high yield credit market but it is inherently more ‘defensive’ through its allocation to senior loans, infrastructure debt and private credit.”
Mr Spearing also noted that, as an actively managed fund, the portfolio can be adjusted to suit changes in the economic environment.
“The underlying fund managers that the fund invests in are also well positioned to navigate the economic challenges that lie ahead and take advantage of the recent sell off in bond markets,” he added.
“The fund has been constructed to have lower volatility and better defensive characteristics than the broader high yield market, leading to better risk adjusted returns over the medium-to-long-term. This leaves us well positioned as we face a likely global recession.”
According to AFM managing director, Karyn West, the fund's ethical screening makes it suitable for a range of investors including those with environmental concerns as well as charities, endowments and religious organisations.
Earlier this year, the firm launched the Apostle People and Planet Diversified Fund with the aim of directing investments into real growth opportunities while creating a “positive impact in line with impact investing principles”.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.