NAB launches new Antares income fund
Income funds are all the rage. At a time of falling interest rates, an investment that pays more than the cash rate is attractive.
The Antares Income Fund is an actively managed fund that places the core of the funds in the Antares Enhanced Cash Trust and smaller amounts in a range of other credit securities such as short-duration credit, global investment-grade credit, long-short credit and global high yield.
The fund aims to beat the UBS Bank Bill Index by 1% to 2.5% after fees (a total of 0.55% a year) over a rolling three-year period.
The minimum investment is $20,000 and the income is paid quarterly. It doesn't have a track record yet as it only commenced in October 2013. Ratings agency Lonsec gives it a "recommended" tag.
The fund can use derivatives such as futures, interest rate swaps and credit default swaps to gain exposure to certain markets and manage risk. It doesn't gear the portfolio.
The investment team managing the fund is experienced and stable with the three most senior members - Ken Hyman, Andrew Rivers and Mark Kiely - having clocked up an average industry experience of 18 years and 10 years with Antares. All up, Antares manages $20 billion in fixed income.
The investment group is fully owned by National Australia Bank.
The fund is hedged and invests in mainly floating rate securities. There is limited interest rate risk.
MONEY VERDICT
If you want more than a bank bill return and are prepared to take on a bit more risk, this product could be for you. Lonsec says it has moderate currency risk and low to moderate risk generally.
The product disclosure statement doesn't outline the credit rating profile of the securities it invests in and it is worth checking how many securities are sub-investment grade. If it holds purely investment-grade or BBB-rated securities and better, it may be hard for the managers to get performance better than the UBS Bank Bill Index.
You may as well knock off some non-tax-deductible debt.
Get stories like this in our newsletters.
