Islamic finance: Malaysia goes global
1 July, 2008Should you sack your fund manager?
15 July, 2008ROADTEST
Macquarie Income Opportunities Fund
A fund investing in a host of different debt securities
Performance
According to Morningstar, it ranks 11th out of the 64 funds in this area (Morningstar calls them “Multi-Strategy Income” funds) over the year to May 31, with 3.88%. Its 5.54% over three years ranks 8th.
Holdings
At any given time it can have 0-10% in emerging markets debt, 0-15% in global high yield, 0-40% in global investment grade credit, 0-50% in hybrids, and 20-100% in a core income portfolio, made up of asset-backed securities and floating rate notes. The first three of those categories are managed by specialist fund managers, everything else by Macquarie. At the moment, unsurprisingly, it’s positioned with less risk than usual, with less exposure to credit spreads. For example nine months ago hybrids were 20% of the fund; by March this year they were less than 1%.
Experience
Macquarie boasts of managing over $25 billion in cash and fixed interest investments, so it’s certainly used to managing in this area. It does however subcontract management of big chunks of the portfolio.
Fees
Management fee is 0.492%, with a 0.15% buy/sell spread. Minimum investment is $20,000.
Gripes
Structured and exotic debt securities have been a very scary place to be in the last 12 months. Macquarie has done much better than some but you could actually have got a higher return (pre-tax) in many Australian cash deposit accounts.
Verdict
Performing well in a complicated area. But is it time to go back in to this kind of fund yet?
