Spectrum Strategic Income Fund Monthly Summary September 2025
September 2025
Performance
The month of September 2025 produced a gain of 0.57%. The portfolio continues to outperform the cash benchmark of RBA Cash Rate +1.50%. The monthly performance exceeded the benchmark by 0.27%. Overall, the Fund’s rolling annual return is 6.09%.
Market Insights
Credit has continued to perform supported by both reasonable economic conditions and positive equity markets. New issues are being received well by new and existing investors. The attractiveness and quality of the Australian market is a key factor driving increased demand from offshore and domestic investors. We expect Credit will remain supported given solid corporate fundamentals and an improving economic landscape on the back of lower interest rates.
Key Contributors & Detractors
The portfolio continues to benefit from exposures across various cohorts and structures. The corporate hybrid sector has benefited from spread compression across various sectors. Corporate hybrid spreads have compressed 2-5 basis points depending on tenor. Bank spreads and corporates have also continued along their tightening journey.
Heavily oversubscribed new issues and continuing demand for securities has ensured continued strong performance. New to market issuers have benefitted from strong market conditions and continued strong investor demand. There were moderate levels of issuance in September, and as such buyer fatigue was not an issue.
Outlook & Strategy
We believe the recent inflation print will ensure the RBA is unlikely to ease in the short term. We now expect the RBA will wait for the 4th quarter inflation read before making any policy adjustments. As such we may need to wait until February before the RBA moves next, which is broadly in-line with current market thinking.
As we near the Christmas break, it is expected we will see continued issuance from the frequent borrowers as well as some inaugural issues which are creating excitement in the credit market.
Continued positive economic conditions should drive further performance in the Credit space.
