Over the 12 months to 28 February 2015, Smarter Money Active Cash returned 4.1 per cent to its wholesale investors after all fund fees, which was substantially superior to the RBA’s cash rate, currently 2.25 per cent, SMI said.
This long-term outperformance has just won SMI a significant new $50 million institutional mandate. The agreement was finalised on March 17 and represents a 25 per cent increase in funds under management (FUM). It will be split equally across Smarter Money Active Cash and the new Smarter Money Higher Income Fund.
“Our commitment to an active, value-based investment style and a deep, six-person investment team has delivered a highly competitive treasury solution for individuals, advisers, companies and institutions, and this is being recognised as our three-year track record builds,” Darren Harvey, SMI’s co-chief investment officer, said.
“Over 70 per cent of SMI’s funds under management is wholesale today with investors increasingly seeking low volatility, post-fee performance that provides them with an attractive real return above the rate of inflation and negligible interest rate duration risk.”
The Smarter Money Active Cash strategy invests its capital across Australian deposits and ‘investment grade’ floating-rate (mainly bank) notes with a target average ‘A’ credit rating. Smarter Money Active Cash targets returns of 1 per cent to 2 per cent over the RBA cash rate after fees.
This strategy has been proven in a range of financial market conditions, the firm said. Since its inception in February 2012, Smarter Money Active Cash has held, on average, 55 per cent of its portfolio in Australian cash deposits with the remainder diversified across liquid Australian floating-rate notes.
“Smarter Money Active Cash was designed to deliver superior performance in both rising and falling interest rate climates, by avoiding traditional fixed-rate bond duration risks,” Mr Harvey said.
Smarter Money Active Cash is rated by several independent researchers, including Mercer, Australia Ratings (‘A’), and Atchison Consultants (‘Highly Recommended’), and listed on numerous platforms, such as Macquarie, BT, OneVue, Netwealth, and ASX mFunds.
SMI was established in October 2011 by two parties: Yellow Brick Road, which provides SMI with marketing, retail and wholesale distribution and accounting and management services, and Coolabah Capital Investments Pty Ltd, which supplies SMI with its portfolio management team. Yellow Brick Road and Coolabah each own 50 per cent of SMI, which launched its first product, the Smarter Money Active Cash Fund, in February 2012.
Meanwhile, as at 28 February 2015, the Smarter Money Active Cash Fund (Assisted Units) received a five-star Morningstar rating based on its assessed three-year risk-adjusted performance within the Morningstar Peer Group – Australian Short Term Fixed Interest – Investment Trust, since February 2012.
SMI’s new Smarter Money Higher Income Fund, launched in September 2014, aspires to a higher net return hurdle of up to 3 per cent above the RBA cash rate after fees. Since its inception over six months ago, Smarter Money Higher Income has delivered an annualised return of more than 5 per cent after all fund fees.
Both products have an independent responsible entity, independent fund administrator, and independent custodian. There are independent unit pricing and asset valuations every business day with earnings accrued daily and paid quarterly.
