Objective: The Coolabah Floating-Rate High Yield Fund (Managed Fund) (YLDX) aims to provide investors with higher income than other traditional fixed income investments by investing in a portfolio of investment-grade Australian Floating-Rate Notes (FRNs) with enhanced yields.

Strategy: The Fund predominantly invests in a portfolio of cash securities and investment grade floating-rate, Australian bank-issued senior and tier 2 bonds. It also has the capacity to invest in government bonds and corporate bonds. In contrast to fixed-rate bonds, FRNs pay a variable-rate of interest that resets monthly or quarterly and moves up and down with changes in a recognised reference interest rate. In Australia, FRNs generally track the returns of the Reserve Bank of Australia’s (RBA’s) cash rate via a benchmark proxy called the quarterly Bank Bill Swap Rate (BBSW) plus an additional credit spread, or interest rate margin above BBSW. Unlike a fixed-rate bond, an FRN has very low interest rate risk given the interest paid by an FRN will be highly correlated with moves in the RBA cash rate. The Fund will borrow or use leverage to provide additional exposure to these assets. Leverage can amplify gains and also amplify losses. It cannot invest in hybrid securities, equities or property.