Spectrum Strategic Income Fund Monthly Summary July 2025

July 2025

Performance

The return for June 2025 saw portfolio returns continue in a solid fashion. The Fund gained 0.88% bp for the month and outperformed its cash benchmark by 0.56% for the month. Overall, the Fund’s rolling annual return is 5.93%

Market Insights

Credit market returns were buoyed by solid market conditions and investment house rebalancing their portfolios post 30 June 2025. Economic indicators continue to suggest reasonable growth whilst the expansion in credit growth numbers suggest further economic consolidation in the broader economy. With a rate cut to look forward in the coming months as the RBA returns monetary policy to neutral credit looks set to perform over the coming months.

Key Contributors & Detractors

The driver of return was the compression of credit spreads. Credit spreads tightened over the month and in particular Bank AT2 credit spreads tightened strongly in the shorter tenors. Corporate hybrids saw a solid bid tone, and this led to the continuing performance of that sector. Overall bank credit tightened about 5-6 bp and corporate spreads tightened on average 6bp. The improving performance of credit was due to the re-emergence of offshore interest and a lack of supply of new issues.

With interest focussed on a pending easing of cash rates by the RBA and solid economic numbers being recorded the demand for credit and the performance of credit is likely to continue.

Outlook & Strategy

In the moment markets continue to focus on the announcements from the U.S. Administration. Tariffs remain top of topic and any inference of hikes in tariff rates has led to uncertainty and volatility. Currently the Fund has been doing some repositioning, selling some Kangaroo bonds where the country is exposed to the U.S Administrations whim (Canada), and purchasing securities that are not impacted or have very little exposure to the U.S. Credit quality within the book has improved marginally and the book is well positioned to take advantage of spreads should they widen.