Apostle Funds Management launches first ethical high yield credit fund

Karyn West

Apostle Funds Management (AFM) has announced the launch of its ethically screened high yield credit Fund (the Fund).

The Fund is accessible to wholesale investors and adds to the boutique manager’s stable of ethical and impact strategies, following the launch of its Apostle People and Planet Diversified Fund in April.

AFM have designed the portfolio the be an all-weather Fund that allows it to adjust to the current interest rate and inflationary environment. The Fund focuses on generating a stable income along with capital preservation.

AFM’s Managing Director Karyn West says, “This Fund is designed for investors who are seeking a good total return of 5-7% with characteristics that lessen the impact of rising rates and assist in higher inflationary periods. With our ethical screening it will be suitable for many investors, including those who have environmental concerns, for charities, endowments and religious organisations.”

The Fund provides exposure to US alternative fixed income assets for wholesale investors by investing in experienced managers that have exemplary track records in niche areas such as liquid infrastructure credit and private real estate debt.

AFM’s Portfolio Manager Steven Spearing explains, “Fixed income as an asset class is well positioned to provide stability and capital preservation. There are good quality sub-investment grade bonds trading at historically cheap levels, and we see this as a fantastic opportunity to be entering the market with a new credit Fund.

The Fund can navigate a variety of market conditions using a mix of fixed and floating rate instruments, and a mix of high yield fixed income assets (loans, bonds, private credit). Expected returns are in line with the high yield credit market but it is inherently more ‘defensive’ through its allocation to senior loans, infrastructure debt and private credit.”

Steven continues, “As an actively managed Fund we are able to adjust the portfolio to suit the economic environment. The underlying Fund managers that the Fund invests in are also well positioned to navigate the economic challenges that lie ahead and take advantage of the recent sell off in bond markets.

The Fund has been constructed to have lower volatility and better defensive characteristics than the broader high yield market, leading to better risk adjusted returns over the medium-to-long-term. This leaves us well positioned as we face a likely global recession.”

The Fund is ethically screened, diversified and alternative high yield credit with a target yield of 5-7% net of fees p. a. over rolling 5-year periods. The Fund is daily priced, liquid and hedged into AUD.