Coolabah Active Composite Bond Fund (Hedge Fund) (CXA: FIXD) August

Key Points:

• The Coolabah Active Composite Bond Fund (Hedge Fund) (the Fund or FIXD) is an active, fixed-income strategy. It is listed on the CBOE. Its focus is on mispricing in the government and corporate bond markets, with the aim of delivering superior risk-adjusted returns over the prospectus benchmark.
• The investment manager, Coolabah Capital Investments or CCIR, aims to generate returns by taking a long or short position in mispriced fixed-income securities. Since its inception, the manager has made limited use of shorting, relying on leveraging the investment strategy implemented in the Smarter Money High
  Income Fund.
• The Fund invests primarily in senior and subordinated debt securities, hybrids and derivatives issued by Australian entities locally and overseas, although it can also invest in these securities when they are issued by overseas entities. The Fund targets holding the majority of its portfolio in investment-grade quality debt
  securities and hybrids.
• Both, a portfolio leverage and a duration overlay is applied. The leverage can range of 1.0x to 2.5x with an average of 1.5x. A duration overlay is applied to create a level of duration equal to the benchmark index, thereby being referred as a ‘duration neutral’ strategy. Currently, the duration of the Fund is 5.2 years. As such, and unlike any other CCI fixed income strategy, the Fund is a long duration strategy (i.e., it adopts interest rate risk) but being duration neutral the manager is not seeking to generate alpha from interest rate views.