Prime Value Diversified High Income Fund

The Fund aims to provide regular monthly income with medium-risk exposure. Established to provide our investors with a target return of 4.0% p.a. over the RBA official cash rate, the Diversified High Income Fund is an income fund that invests in cash, “fixed income” type securities, trusts investing in direct property or mortgages and other managed funds.

Capital Preservation and Return

• Portfolio assets assessed under strict credit tests
• Key objective is capital preservation with regular income
• Mistakes compromising capital preservation not tolerated
• Benchmark return is RBA cash rate + 4% net of fees

Liquidity

• Emphasis on assets that can be readily bought and sold
• Liquidity actively assessed and managed
• We use a range of brokers and market sources for assets

Diversified Portfolio

• 25-30 assets typically held
• Assets range across senior secured, senior, and bank capital instruments, mortgages and Property Trust investments
• Portfolio diversified across income, maturity, sector, and credit

Risks

• Credit, term, liquidity risks managed rigorously
• Mistakes compromising capital preservation not tolerated

Performance

• Fund only started operating in August 2019
• Seek to emulate the return and capital stability record of the Prime Value Enhanced Income Fund

Click here for the latest performance and unit prices.

The Diversified High Income Fund offers investors an alternative way to invest their cash primarily in the ‘fixed income’ market that provides a higher return investing in selected securities available. Like the Enhanced Income Fund, the Diversified High Income Fund has a “fixed income” type of risk associated with it as well as investments in property markets to help it achieve an even higher return.

The target return of the fund is 4.0% over the RBA official cash rate. The fund allows investors to diversify their cash, equity and property investments. The fixed income market comprises securities that have a low market price correlation to equity and property prices. The higher returns available through the Fund come with an increased risk compared to the Prime Value Enhanced Income Fund however the higher risk profile is carefully managed so as to minimise the chance of permanent capital losses.

Furthermore, the Fund is managed in a way that avoids any market disruptions or major market events so that we can always enable our investors to redeem their capital quickly.

Stewardship:

We take our role as stewards earnestly and value our responsibility to investors – putting our clients first. Co-investing alongside our investors ensures a true alignment of interest.

Quality investing requires a balance between Art and Science:

When evaluating investment opportunities, we assess an investment’s fundamentals while also taking into account macro economic data, corporate financial reports, industry data and comments from corporate officers. Prime Value believes all economic and financial tests require flexibility, depending on the phase in the economic cycle or the type of stock. Experience and common sense dictate how the formula must be adapted to determine the appropriate investment decision for each investment.

Analysis is the first step in investing; however interpretation and judgment are equally important.

Minimising mistakes:

Minimising mistakes is our number one imperative so as to meet the Fund’s benchmark return and protect investor capital. We must remember investment decisions are based on market views and intelligence that is often faulty, and on research that is never complete and error-free. In practice the Investment Manager who makes the fewest mistakes usually produces superior results. Our research efforts are focused as much on investments that may in the future detract from the overriding objective for the Fund to meet its benchmark return and protect investor capital.

Market based indices are inefficient:

Indices are a good way to get a feel for how well the market in general has performed, but they are not necessarily a good model for building a portfolio of securities. At Prime Value our main focus for this Fund is to strategically invest in a range of securities (issuers, tenors) that will deliver a level of return commensurate to the risk. The Fund’s benchmark is the RBA Cash Rate plus a margin of 4% pa. The Cash Rate benchmark is chosen to reflect the base interest rate for Australia as objectively set by the RBA.

The information contained in this document is general in nature and has no regard to the specific investment objectives,
financial or particular needs of any specific recipient. It is not intended to constitute investment advice or a personal
securities recommendation. This presentation is not an Information Memorandum (IM) or a Product Disclosure Statement
(PDS) or an offer of units and contains a brief overview of the investment only. Any prospective investor wishing to make an
investment in the Fund must obtain and read the relevant IM or PDS (particularly the risk factors discussed) and complete an
application form attached to the IM or PDS. Neither Prime Value Asset Management Limited nor its associates or directors,
nor any other person, guarantees the success of the Prime Value Funds, the repayment of capital or any particular rate of
capital or income return, or makes any representation in relation to the personal taxation consequences of any investor’s
investment.