IAM Global Credit Opportunities Fund

The Fund invests in a diversified portfolio of global credit investments as selected by the Manager, with all investments hedged back into Australian dollars.

Investment Objective 

The Fund's investment objective is to generate total returns of 8 to 10% p.a. (after fees) over a three-year horizon, the majority of which will be in income.

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

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Performance as at: 31/12/2023

Inception Date: 01/12/2017

Note: 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.

Performance as at: 31/12/2023

Inception Date: 01/12/2017

Note: 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.

IAM’s approach to investing in credit is high quality, disciplined, consistent, and replicable. We employ a fundamental, bottom-up methodology with an intensive due diligence process. The key stages to the investment process are outlined below.

• Idea Generation: New investment ideas are generated from a combination of proprietary screens, industry research and commercial relationships, with the Manager seeking the best absolute return opportunities. Relative value is assessed using comparisons to industry peers and a careful consideration of cyclical and structural trends.
• Idea Evaluation: The due diligence process comprises commercial, legal, financial, and industry analysis. The analysis includes desktop modelling as well as calls with management, industry experts, and broking analysts. For any new investment, the Manager will spend a large amount of time building an expert understanding of the business model, key operational and financial drivers, and the competitive position of the issuer, as well as the broader business and industry risks. The financial analysis includes detailed cashflow modelling and scenarios covering the management case, base case, and downside possibilities. Investments that do not pass the Manager’s due diligence and return hurdles are not included in the portfolio.
• Execution and Portfolio Management: Execution is done in-house by the Manager. Where possible, we obtain multiple quotes before any purchase or sale. We have established trading relationships with multiple counterparties allowing us direct access to global credit opportunities. Investments are predominantly sourced from secondary markets, but we occasionally participate in primary issuance. The Manager has established portfolio guidelines that will be strictly monitored. We undertake ongoing portfolio simulation work to ensure adherence to portfolio limits and desired portfolio positioning.
• Credit Monitoring: We regularly update credit analysis and models; review research, company releases, and news stories; and maintain a dialogue with management for all issuers represented in the portfolio. This diligence is performed to ensure that issuers are executing in line with expectations and that there are no changes to our investment thesis. When an investment thesis is revised, the investment is re-evaluated.

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.

© 2023 IAM Global Credit Opportunities Fund (GCOF) is issued by Trustees Australia Limited ABN 63 010 579 058 AFSL 260038 and managed by IAM Fund Pty Ltd ABN 54 643 600 088 as corporate authorized representative (no.001296921) of AFSL 260038. 

Disclaimer: IAM and its subsidiaries offer general financial product advice only. This document, and any information or advice, has been provided by IAM without taking account of your objectives, financial situation and needs. You should, before acting on any advice from IAM consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If this document, or any advice, relates to the acquisition, or possible acquisition, of a particular financial product, you can access the GCOF Information Memorandum (https://incomeam.com/global-credit-opportunities-fund/) before making any decision about whether to acquire the product. Neither IAM, nor any of its directors, authorised representatives, employees, or agents, makes any representation or warranty as to the reliability, accuracy, or completeness, of this document or any advice. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or advice. Past performance of any product described on any communication from IAM is not a reliable indication of future performance. Forecasts contained in this document are predictive in character and based on assumptions specified the document and generally available at the time and no reliance should be placed on the accuracy of any forecast information. The actual results may differ substantially from the forecasts and are subject to change without further notice.