Spectrum Strategic Income Fund Monthly Summary November 2025
November 2025
Performance
The Fund was up 0.09% over the month. November was a volatile month which saw spreads push wider as equity markets tumbled. The portfolio continues to outperform the cash benchmark of RBA Cash Rate +1.50% on a rolling year on year basis.
Market Insights
Credit markets suffered a pullback over the month as spreads widened in sympathy with falling equity markets and concerns over the possible bond issuance by the U.S. hyper-scalers as they seek to fund their data centres and power plants. Credit markets over the month widened about 5-7 bp. However, at the higher levels a bid tone returned. With markets looking to square off before holiday season, issuance look likely to slow.
Key Contributors & Detractors
Over the month credit spreads widened as equity markets suffered. The resilience of the portfolio investing heavily in floating rate assets enabled a positive return. Volatility is set to slow, however geopolitical or political events elsewhere may create some volatility.
Over the months senior bank unsecured bonds were 2-3bp wider, corporates widened a similar amount whilst bank tier 2 securities moved 2-7 bp wider, and corporate hybrids were marginally wider. The shorter dated securities in the portfolio saw the most movement.
Outlook & Strategy
Recent GDP, inflation and employment numbers have caused some doubt about whether the RBA is likely to ease over the coming months. The recent inflation number was a concern, but the number was a result of two unexpected numbers. The main factor was the increase in water charges by 11% by Sydney Water. This is a special case as normally increases are made quarterly. Power also contributed to the spike.
The market has moved away from any rate cuts in the coming months, however, there is a possibility later in 2026 and especially so if inflation moves towards the lower end of the band and employment stumbles.
Recent economic data suggest that the economy is steady, profit growth is sluggish but still positive and credit creation and growth is continuing at a steady pace. Looking past the recent volatility the outlook is positive for credit and equity.
