Prime Value Enhanced Income Fund topping the tables for one and five-year performance
The Prime Value Enhanced Income Fund has navigated a difficult market environment to top its peers across the one year and five year time periods in the ‘enhanced cash fund’ category*, according to the Yield Report survey of 20 similar funds.
The Prime Value Enhanced Income Fund was established in April 2014 to provide “…regular quarterly income with ‘low’ risk exposure of capital loss in the medium term appreciating that market and other factors can cause variations from time to time in the Fund’s unit price.”
The Fund’s primary objective is capital preservation, which it achieves via investing in a diverse range of debt securities in Australia. Part of this strategy is to return the 90 day Bank Bill/Swaps (BBSW) rate plus 2% – the Fund has regularly exceeded this return.
While capital preservation is the name of the game, Yield Report shows the Prime Value Enhanced Income Fund has been a solid, top quartile performer since inception: The Fund is currently ranked the top performer among its peers for performance over three months, one year, and five year time periods – it is the only fund to have returned above 3% for the five year period, having delivered a five year return of 3.05% per annum net of fees*.
Since inception to 31 May 2021 the Fund has delivered a 2.94% return per annum, net of fees. When franking credits are included, the net return increases to an estimated 3.45% per annum.
The Fund’s return for the 12 months to 31 May 2021 is 3.26% net of fees.
Matthew Lemke, portfolio manager of the Prime Value Enhanced Income Fund, is also an investor in the Fund and said it was established to provide an alternative to low yielding cash investments. “Investors want somewhere to deposit their funds without going backwards against inflation.
“This is becoming more relevant as inflation rises globally with supply side shortages and bottlenecks due to the pandemic. While this may be a short-term blip, a return to more normal economic activity will see inflation move progressively higher longer term, which will erode investor savings.
“We have an opportunity to diversify across several quality unlisted securities via the professional securities market. These offer more stability than listed securities, enabling greater capital preservation along with useful returns.”
Mr Lemke said there was growing demand for lower risk income approaches while several asset classes, such as equities and property, have risen sharply in recent months as a worldwide phenomenon in western developed countries.
“Investors still want some stability in their portfolios because markets are unpredictable. They need to know some of their capital is not vulnerable to large swings where 10, 20, 30 per cent can be lost in a short period of time.
“Quality, diversified income funds can provide important ballast to a portfolio over time whilst earning an above-inflation return. This protects the real value of hard-won savings.”
*Figures via Yield Report for the period to 31 May 2021
For any questions about how the Prime Value Enhanced Income Fund supports investor portfolios, please contact Senior Relationship Manager Andrew Russell on arussell@primevalue.com.au or call 0414 299 249.
For investors wanting an income fund with higher returns and slightly higher risk, Matthew Lemke also manages the Prime Value Diversified High Income Fund.