Insights

Australian financial markets were impacted by the higher-than-expected May increase in the RBA target cash rate which saw Australian equities, credit and bonds underperform global peers over the month. Over 1 year, the Trust’s portfolio has returned 1.9%.While not immune to month-to-month volatility, the Trust’s resilience over the first five months of the year is notable when considering the turmoil in financial markets.

Basis points, sometimes called bps or ‘bips’, are a unit of measurement used in finance, usually to describe small but significant percentage changes. The term is commonly employed to describe changes in interest rates.

In case you missed it, we sat down with Portfolio Manager Michael Korber and High Yield Analyst, Michael Murphy to discuss the end of the four decade bond bull market, and where to invest now that interest rates are rising.

The cash rate has a big impact on the Australian economy as the cost of borrowing money can be used by the Reserve Bank to fuel or dampen down the country’s willingness to spend.

The Trust’s portfolio performance was flat in March, in line with the Reserve Bank of Australia (RBA) Cash Rate (benchmark). Portfolio Manager Michael Korber considers the outlook for credit markets to have improved somewhat and expects it to offer relative value opportunities with PCI being well positioned to capitalise.

The yield curve is a graph that plots the yields or interest rates of bonds having equal credit quality but differing maturity dates. This allows investors to get a sense of how bond markets broadly view the economic environment.

Over the 12 months to 28 February 2022, the Trust’s portfolio returned 3.3%, outperforming the benchmark by 3.2%.

Defensive assets aim to provide long-term stable returns to investors with lower volatility. Examples include fixed interest and cash investment options.

Running yield measures a bond's return or yield each year as a percentage of the bond’s market value or price. This gives investors a good idea of what they can expect for a return in the current market.

In this presentation, PCI provides an update on its portfolio and how it is positioned against market conditions.

Over the 12 months to 31 December, the Perpetual Credit Income Trust (ASX: PCI) has returned 4.4%, outperforming the RBA Cash Rate (Benchmark) by 4.4%.

In January 2022, BondAdviser released an updated rating report on ASX: PCI, upgrading its rating to "Recommended"