Bentham High Yield Fund celebrates 25 years (Silver Jubilee) of being one of Australia’s longest-running high yield bond funds

The Bentham High Yield Fund, managed by specialist global fixed interest and credit investment manager Bentham Asset Management, is celebrating its 25^th year of providing regular income to clients.

The Fund primarily invests in a diversified portfolio of US high-yield bonds and is managed by Bentham, with the Credit Suisse Credit Investments Group (CIG), of Credit Suisse Asset Management CSAM as sub-adviser. CIG is one of the largest and most experienced providers of non-investment grade credit solutions in the world, managing approximately USD 60 billion as at 30 September 2023.

Since inception (15 October 1998 to the end of September 2023) the Bentham High Yield Fund has returned 7.79%pa before fees (7.06%pa after fees) with annualised volatility of 8.04% pa.  The volatility of the benchmark ICE BoAML US Cash Constrained Index (AUD Hedged) since inception is 9.13%.

In the last 12 months (15 October 1998 to the end of September 2023) the Fund has returned 11.94% (11.35% after fees) compared with the benchmark return of 8.44%.

“I think the unique thing about the Bentham High Yield Fund is that we’ve been through so many cycles. We’ve been through numerous growth periods, but also at least three global recessions. It’s a portfolio that has delivered on its returns relative to a performance benchmark, and it’s proven to be less volatile than what can sometimes be a volatile market,” commented Bentham Principal and CIO, Richard Quin.

High yield bonds are corporate bonds that are rated below investment grade bonds. High yield bonds pay investors a much higher coupon for the risk they take on when compared to investment grade bonds. The Bentham High Yield Fund currently invests in over 220 securities that have an average credit rating of B+.

“As investors, we can diversify risk in high yield bonds by not having too large a concentration to any one bond,” Quin says.

“We believe it’s really important to diversify by industry and, unfortunately, in Australia there is a lack of depth of traded, high yield bonds because it’s a relatively small economy with a narrow number of industries, plus the lending market is dominated by our large banks. To support diversity and liquidity, most of the bonds in the Bentham High Yield Fund are issued by large US companies, with a smaller exposure to large European corporate issuers.”

High yield bond funds can provide investors with a stable source of strong income, he adds.

“Historically, high yield bonds have had a lot less volatility than equities and are a diversifying element in portfolios. So, they may merit a position in many retirees’ portfolios,” Quin says.

“Security selection and credit management are really important in this sector and it is essential to choose a fund manager with relevant experience and a good track record,” Quin added.

The Bentham High Yield Fund has assets under management of $315.3 million^[1] and an initial minimum investment of $10,000.

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[1] As at September 30, 2023

This material has been prepared by Bentham Asset management ABN 92 140 833 674 AFSL 356199 (‘Bentham’), the investment manager of the Bentham High Yield Fund. Fidante Partners Services Limited ABN 44 119 605 373 AFSL 320505 (Fidante) is a member of the Challenger Limited group of companies (Challenger Group) and is the responsible entity of the Fund.  Other than information which is identified as sourced from Fidante in relation to the Fund, Fidante is not responsible for the information in this material, including any statements of opinion. It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs.  You should consider, with a financial adviser, whether the information is suitable to your circumstances. The Fund’s Target Market Determination and Product Disclosure Statement (PDS) available at www.fidante.com should be considered before making a decision about whether to buy or hold units in the Fund(s.). To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Past performance is not a reliable indicator of future performance. Bentham and Fidante have entered into arrangements in connection with the distribution and administration of financial products to which this material relates.  In connection with those arrangements, Bentham Asset Management ABN 92 140 833 674 AFSL 356199 (‘Bentham’) and Fidante may receive remuneration or other benefits in respect of financial services provided by the parties. Fidante is not an authorised deposit-taking institution (ADI) for the purpose of the Banking Act 1959 (Cth), and its obligations do not represent deposits or liabilities of an ADI in the Challenger Group (Challenger ADI) and no Challenger ADI provides a guarantee or otherwise provides assurance in respect of the obligations of Fidante. Investments in the Fund(s) are subject to investment risk, including possible delays in repayment and loss of income or principal invested. Accordingly, the performance, the repayment of capital or any particular rate of return on your investments are not guaranteed by any member of the Challenger Group.