Spectrum Strategic Income Fund Monthly Summary June 2025

June 2025

Performance

The return for June 2025 saw the portfolio gain 0.31%. The Fund was flat for the month to the cash rate and outperformed the cash rate by 1.36% for the financial year. Overall, the Fund’s rolling annual return is 5.65%.

Market Insights

Domestic markets in June were once again impacted by expectations of a rate cut by the RBA in Australia and like international markets saw some volatility following comments by Trump. During the month bonds had a renaissance and rallied strongly whilst credit languished and saw some spread widening. The domestic market also saw some institutional selling as investors pared positions ahead of the end of financial year. This selling caused some spread widening over the month. As month end approached, buying re-emerged and this trend has continued into July.

Key Contributors & Detractors

Government bonds led yields lower as the domestic market priced in an easing of cash rates by the RBA. Increased geopolitical tensions also saw the market adopt a risk off view. Spreads widened in response to continued uncertainty. At current levels the fixed income market appears to be fully pricing in several rate cuts. Over the month there was lacklustre buying and indigestion from earlier issuance meant that demand for paper was light. During the month we saw Melbourne Airports launch their first hybrid issue in the Australian market. Demand for the issue was solid with the issue oversubscribed by 4 times.

Outlook & Strategy

Markets will remain on edge as we await Trump’s announcement regarding the imposition of tariffs. With central bankers likely to remain alert to a possible increase in inflation rate cuts may not necessarily follow slowing economic conditions. Credit markets remain bound to both economic conditions and companies reporting. In Australia we are seeing solid growth in household incomes and this is a fundamental credit positive. Against that there is a tight labour market and sluggish productivity and this could contribute to inflation. The outlook remains volatile.