Foresight Analytics' has recently completed a ratings assessment of the newly launched Coolabah Floating-Rate High Yield Fund and rated it as Very Strong, indicating a very strong conviction that the management team can deliver a risk-adjusted return in line with its' investment objectives.
Foresight said the investment manager's support for this strategy is very well-resourced and continues to be enhanced.
The Coolabah Floating-Rate High Yield Fund invests in Australian bank senior and subordinated floating-rate notes (FRNs) to which leverage is applied within a permissible range of 50 per cent to 75 per cent.
"The Australian bank FRN market has historically exhibited exceptional returns per unit of risk, has minimal default risk, and is highly liquid. In short, the underlying portfolio is well suited to be geared to enhance returns," Foresight Analytics' analyst Rodney Lay said.
"However, the high level of leverage does create material mark-to-mark volatility/drawdown risk. Historically, on a back-tested basis these risks are not dissimilar to global high yield bonds (albeit back-tested return on the Fund's strategy were materially higher)."