YBR Smarter Money awarded "A" rating after delivering 6.6% to 7.0% pa

As regular readers will know, I have advocated higher cash and fixed-income weights in multi-asset class portfolios for a long time. I've also argued that the $1.4 trillion superannuation system could help solve many of the funding challenges our big banks and smaller lenders face by allocating more capital to these sectors. The major banks in particular source a lot of their wholesale money from offshore, and there should be more room in super funds' portfolios for their bonds. I am confident that these changes will gradually occur as the population ages and community risk-aversion naturally escalates.

I am also a director of Yellow Brick Road's funds management business, which launched a savings trust, YBR Smarter Money, six months ago. This fund invests in Australian bank deposits, term deposits, and investment grade, (primarily) bank-issued bonds. It is, therefore, another conduit through which the broader banking system can tap into resident (as opposed to foreign) savings. At the same time, it gives retail investors an opportunity to access a diversified portfolio of wholesale bonds that are not normally available to them.

Smarter Money's performance over its first half year, in which it returned investors between 6.6% and 7.0% per annum after all fund fees, with low volatility, has been very pleasing (refer to the chart below).

Smarter Money was also recently awarded an "A" rating by a credit and funds management rating agency. The ratings analyst, Chris Dalton, who for many years was managing director of Standard and Poor's in Australia and New Zealand, observed, "Smarter Money represents a new breed of fixed income fund delivering a return to investors generated from an actively managed, liquid and high credit quality portfolio of deposits and fixed income securities.” Dalton also said, “investors in the Fund have a low exposure to volatility arising from changes in interest rates and the credit risk of the portfolio is actively managed by only investing in investment grade securities.” 

You can read more about YBR Smarter Money here or you can email Rob Morton, YBR's head of investment products, at rob.morton@ybr.com.au to speak to someone directly about it.