IAM Global Credit Opportunities Fund

Providing investors with exposure to a diversified portfolio of global credit investments, hedged into Australian dollars.

Current NAV price (31/10/2023)

$0.90070

Fund Overview and Investment Objective

The IAM Global Credit Opportunities Fund (“GCOF” or “Fund”) provides investors with exposure to a diversified portfolio of global credit investments, hedged into Australian dollars. The Fund’s objective is to generate total returns of 8 to 10% per annum over a three-year horizon, the majority of which will be in income. Investments are selected on a bottom-up basis with a strong focus on capital preservation and loss minimisation.

Investment Strategy

The Fund seeks to generate a positive absolute return comprising income and capital appreciation by investing in global credit markets. Credit investments are selected on a bottom-up basis with a strong focus on capital preservation and income generation.

Key attributes:

Absolute Return

The Fund is index unaware, with investments selected based on superior risk and reward.

Value Oriented

Investments are based on absolute return potential with a strong emphasis on capital preservation.

Global

Investments are selected from a large universe of potential opportunities by utilising proprietary screens and fundamental research, as well as industry and market relationships.

Flexible

The Fund is flexible across asset classes, credit ratings, instrument types, and security structures.

Opportunistic

The Manager will use opportunities created by financial market dislocations, macroeconomic shocks, regulatory changes, and other company-specific events to purchase investments below intrinsic value.

Investments Held

A diversified portfolio of high-yield securities, primarily centred around high-yield bonds and leveraged loans. The Fund also invests in investment-grade bonds, asset-backed securities, and bank capital securities. Foreign currency investments are hedged back into Australian dollars.

Why Invest in this Fund

Enhanced return potential

The Fund aims to provide our investors with higher returns relative to traditional fixed income investments, targeting returns of 8% to 10% per annum (after fees). The Fund’s structure, mandate, and investment process is designed to offer attractive returns with less volatility and capital risk than equity investments, and superior liquidity characteristics relative to private credit investments.

High-quality investment process focused on capital preservation

Deep bottom-up fundamental credit analysis on each investment is the central driver of the investment process. Through rigorous due diligence, we aim to select investments with attractive returns and a low probability of capital impairment. Our investment process is focused on the quality and defensiveness of cash flows, collateral, and documentation as well as business and industry attractiveness. The bottom-up investment selection is supported by disciplined portfolio construction, active monitoring, quantitative analytics, and risk management.

Attractive Opportunity Set

The high-yield and leveraged loan markets have shown impressive resilience, recording only 7 years of negative returns over 42 years. According to JP Morgan, the US High-yield market has generated 75% of the return of the S&P 500, with half the volatility over the last 25 years. In addition, BB-rated high yield has demonstrated its strength through multiple cycles with a less than 1% average default rate over 25 years.

For those managers with expertise, market access, and appropriate mandates – the greater >US$3 trillion scale of the market allows considerable scope to exploit inefficiencies and mispricing when they occur.

Experience

IAM Global Credit Opportunities Fund is managed by an experienced investment team led by Daniel Saldanha, a veteran with 21 years of experience within the industry. Daniel has specialised in sub-investment grade credit (high yield and leveraged loans) since 2002 and brings a wealth of knowledge and experience. This helps the Fund to navigate through the intricate dynamics of credit markets and provides the Fund with the foundations to thrive amidst market shifts.

Daniel Saldanha

Head of Credit and Fixed Income/Portfolio Manager

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Daniel is the Head of Credit at IAM Funds and lead portfolio manager for the Global Credit Opportunities Fund. Daniel has 22 years’ experience in credit markets, including 16 years’ experience as an analyst, trader, and portfolio manager. He has specialised in sub-investment grade credit since 2002.

Before joining IAM Funds in 2023, Daniel held similar positions at River Capital, Bentham Asset Management and Marathon Asset Management. While at River Capital, Daniel managed both the global liquid credit and Australasian private credit mandates. At Bentham, Daniel was responsible for investment analysis and trade execution across a range of funds focusing on High Yield, Leveraged Loan, and Bank Capital investments. At Marathon, Daniel was a lead analyst covering European distressed credit investments across multiple sectors including the technology, media, telecom, energy, and automotive sectors.

Daniel began his career at Credit Suisse, where he held roles in Australia and Europe focused on originating and structuring Leveraged Loan, High Yield, and Mezzanine transactions for private equity and corporate clients. Daniel holds a Bachelor of Commerce (Honours)/Bachelor of Science from Monash University.

Anthony Swan

Senior Investment Analyst

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Anthony is Senior Investment Analyst at IAM and has played a lead role in growing the Global Credit Opportunities Fund.

Prior to joining IAM, Anthony was a senior analyst at River Capital where he covered both equity and credit investments, and he has held similar roles at Acorn Capital in Melbourne and at Bain Capital’s hedge fund in Boston. Anthony started his career as a management consultant with Bain & Company.

Anthony received an MBA from the MIT Sloan School of Management and a Bachelor of Engineering (Honours)/ Bachelor of Science from the University of Melbourne.

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Fund Overview

Responsible Entity Trustees Australia Limited
Suggested minimum investment timeframe At least three years
Distribution frequency Quarterly
Fund Inception Date 03/05/2021
Target Returns 8% to 10% per annum (net of fees)
Base Currency Australian Dollar
Currency Hedging The Fund will hedge foreign currency exposure back to Australian dollars
Applications Monthly
Redemptions Monthly
Minimum Application Initial: $200,000
Additional: $100,000
Minimum Redemption $100,000

Historical Prices and Distributions

Latest Fund distribution ( $ per unit) as of 30/09/2023                    $0.021008

Fees and Expenses

Management Costs  0.80% p.a. of NAV
Performance Fee* 15% of returns exceeding the Hurdle**

*The performance fee is calculated at the end of each financial year
** The Hurdle is the greater of 4.0% per annum or the RBA cash rate plus 3.0%

Performance

Historical Returns (Net of fees)

Performance data as of 31/10/2023.

*Index included for comparative purposes only. The Fund is not benchmarked to any index.

Net Performance (as at 30 September 2023) * 1M 6M 1YR 3YR 5YR Since Inception (p.a.)**
IAM Global Credit Opportunities Strategy -0.08 2.35 6.95 11.09 11.43 8.06
Morningstar Global HY Bond GR Hedged AUD -1.09 0.14 5.59 0.38 1.98 1.85
RBA Cash Rate + 4% 0.69 4.13 7.91 5.93 5.93 6.13

* After management and performance fees (where applicable)
** Inception Date: 01/12/2017. Representative account performance includes USD return series from 1/12/17 – 1/5/21
synthetically hedged to AUD. Actual hedging outcomes may differ.

Investment Growth of $100,000*

Performance data as at 31/10/2023.

* Hypothetical performance assumes net returns and reinvestment of all distributions. Investment Growth chart above displays the growth of an investment of $100,000, made at inception of the strategy on 01/12/2017 to the latest reporting date.

** IAM Global Credit Opportunities Strategy (GCOS). Representative account performance includes USD return series from 1/12/17 – 1/5/21 synthetically hedged to AUD. Actual hedging outcomes may differ.

Gain exposure to a diversified portfolio of global credit investments, hedged into Australian dollars.

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