Daintree Capital unveils inaugural single unit bank hybrid fund

Daintree Capital has announced the launch of a new global bank hybrid fund, the first single unit fund of its kind to enter the Australian market.

The Daintree Hybrid Opportunities Fund invests in an assorted global portfolio of 25 to 125 hybrid securities of global banks, including Bank of America, Credit Suisse and ING Group. The fund aims to provide investors with a return of 3.5 to 4.5% per annum above the cash rate, net of fees, with quarterly income distributions.

The fund will be available in a new single unit structure that allows investors to apply for units directly, either via a platform or on the ASX through a stockbroker or share trading account.

“Against a backdrop of ultra-low interest rates, we are seeing increased demand from investors for sources of reliable, consistent income,” said Brad Dunn, the fund’s Portfolio Manager.

“Hybrids offer some of the best yield in the fixed income market for a near-investment grade credit rating, with lower risk than investing in equities markets.”

Dunn said that the introduction of the hybrid fund would address the lack of new opportunities in the Australian market, and would provide new opportunities for investors and banks in a post-pandemic world.

“In order to meet this demand, we believe taking a global approach opens up more opportunities to invest in the hybrid securities of large, quality issuers,” he said.

“Over the past decade banks have strengthened their balance sheets as a result of tougher capital rules and they have a high average credit rating. We believe banks are also well positioned to benefit from rebounding economies as the world emerges from the COVID-19 pandemic.”

As of 31 August, 2021, the fund has delivered performance of 12.58% p.a. (after fees), since its initial inception on 1 March, 2020. Mr. Dunn credited this success of the fund above the Australian bank hybrid index to active management and global diversification.

Daintree Capital was established in 2017 by Mark Mitchell and Justin Tyler, and now manages around $700 million for investors. As part of the Perennial Group, the Daintree Hybrid Opportunities Fund will be distributed by Perennial and Australian ETF investment provider eInvest.