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Mutual Limited-Bringing Wholesale Bonds to Retail Investors

September 13, 2017


Mutual Limited Enhanced Cash (MIF) APIR PRM0015

Mutual Limited are a Melbourne based fund manager with in excess of $2.5 billion in FUM, specialising in Australian bank bonds with low interest rate duration. Prudent Australian investment advisors are actively seeking opportunities to gain exposure to corporate bonds, and are looking to MIF to fulfil these exposures.

Mutual Enhanced Cash (MIF), invests in a low interest rate duration portfolio of bonds issued by Australian retail banks, with a focus on ANZ Bank, Commonwealth Bank, National Australia Bank, and Westpac. MIF has no leverage or derivatives. Current running yield is 3.30%, and performance of 4.06% net for the year ending 30 June 2017. All securities in the portfolio are obligations of the banks, with the interest rate reset every 90 days i.e. Floating Rate Notes (FRNs). Hybrids (or Tier 1 instruments) are excluded. MIF produces a consistent and dependable income stream for our investors, managed defensively to achieve a positive return over each historical quarter since inception.

MIF Performance

MIF has a strong and consistent performance, beating benchmark through all periods

 3 months
%
6 months
%
12 months
%
3 years p.a.
%
Incept. p.a.
%
MIF (pre-fees)0.862.134.453.954.18
MIF (post-fees)0.771.934.063.493.70
Bloomberg AusBond Bank Bill Index0.440.891.822.222.36
Relative Performance (Net)0.331.042.241.271.34

Who is investing in MIF

MIF is recommended for long term cash holdings, and term deposit investors who wish to invest in a secure and defensive portfolio while achieving a higher return than available in cash trusts and term deposits from banks. MIF offers investors liquidity; which Term Deposits no longer offer post changes to bank regulations.

MIF is a strong alternative for investors currently in bond and credit funds, offering a low interest rate duration portfolio. Interest rates are at all-time lows, and investors looking to protect their gains and retain exposure to credit should look to low interest rate duration funds like MIF.

Why does MIF invest in Australian bank debt only?

The Australian Prudential Regulatory Authority (APRA) is considered a leading banking regulator. MIF only invests in APRA regulated Australian banks.

APRA are consistently increasing the capital requirements of banks. APRA is continuing to implement rules to ensure the big 4 banks remain in the top 25% of all banks worldwide. Since the GFC, banks have increased their capital reserves by almost double pre-2007 levels, providing greater support to bond holders who are cushioned by this capital against any losses made by banks.

MIF invests a minimum of 60% of funds in big 4 bank debt.

Australian banks issue over $100 billion of debt per annum, with maturities/call dates usually out to 5 years. MIF participates in this large market, with high liquidity and price transparency. MIF restricts the weighted credit duration to less than 2.5 years.

For more information on MIF, or other Mutual Limited Funds, please contact Wayne Buckingham (Managing Director) or Brian Buckley (Director) on 03 8681 1900