Fund manager Perennial Investment Partners has launched a flexible Australian fixed interest trust that can quickly shift between asset classes at any time during the investment cycle.
The Perennial Tactical Income Trust can tactically allocate between cash, bonds and high yield securities to ensure it is positioned to take advantage of any opportunities presented in the marketplace or to weather a downturn without loss.
The product aims to actively control credit risk based on an assessment of the economic environment and the level of credit spreads and can be fully invested in cash.
To be led by Perennial’s fixed interest head Glenn Feben, the trust aims to beat the UBS Bank Bill Index and UBS Composite Bond Index combined.
“The trust was launched due to increasing demand from our clients and financial advisers who wanted a fixed income product that made the tactical decisions between cash, longer duration fixed interest and high yielding securities throughout the investment cycle, rather than making that difficult decision themselves,” Feben said.
There was also a huge opportunity to boost returns using such a tactical approach, he added.
Feben said he currently saw opportunities in long duration bonds, corporate debt and listed hybrid securities.
“Although investment grade credit spreads have tightened recently they are still at very attractive levels and provide compensation well in excess of what is required for default risk,” he said.
The Perennial Tactical Income Trust’s annual expense fee is 0.45 per cent and the investment minimum is $25,000. The product pays distributions quarterly.
Perennial is in talks with research houses to get the product rated and is discussing platform listings.
The firm, owned by listed group IOOF Holdings, managed $4.2 billion of clients’ money in various fixed interest products at the end of May.
