August 2025

Performance

The return for August 2025 saw returns continue to perform and consolidate. The Fund gained 0.55% bp for the month and outperformed its cash benchmark by 0.25% for the month. Overall, the Fund’s rolling annual return is 5.99%

Market Insights

Credit continued to see solid spread compression on the back of a positive market outlook. Continued equity market strength and sound credit metrics highlight further gains are possible. However, markets remain volatile as investors grapple with the consequences of the everchanging tariff landscape, possible stacking of the Federal Reserve, inflation and an increasingly wary RBA.

Key Contributors & Detractors

Solid spread compression saw spreads tighten further. Overall, the big movers were in the Bank Tier 2 sector. Bank T2 paper at the front end saw a strong bid partly in response to the easing of cash rates by the RBA. The market saw solid offshore issuance and those issues attracted a strong bid. Demand for Australian denominated credit remains buoyant.

Outlook & Strategy

Markets will be looking at various factors - some domestic and some offshore. How investors react to the perception that the Fed may become a little less independent will weigh on bond markets. Inflation numbers will provide some guidance to the future direction of markets. What the RBA does in the coming months will weigh on the Australian economy both from an economic and an asset point of view. Concerns over tariffs remain the key focus. Markets will continue to look to inflation for a read on the economy and outlook.