TSA Fixed Income
Third Sector Advantage (TSA) Fixed Income portfolios are specifically designed to meet the needs of investors and institutions who the defensive characteristics of traditional fixed interest portfolios without compromising on return. Our portfolio architecture is built around our risk management framework, which employs a stringent qualitative and quantitative valuation process to ensure a robust, yet dynamic, fixed income solution for our clients.
Unlike traditional fixed income portfolio managers, we believe that fixed income markets are relatively efficient at pricing individual securities relative to their peers when viewed at specific points on the yield curve. However we believe that yield curve liquidity premiums are often detached from reality: often overpricing this liquidity premium over short and medium horizons, while underpricing liquidity over very long horizons. Moreover, we believe that default risk can be effectively offset by by pairing securities and strategies that share a negative correlation to economic barometers, such as pairing Government bonds with investment grade credit (i.e., interest rate and market risk premiums).
By identifying these inefficiencies we believe that patient investors have an opportunity to generate long-term returns consistently 1% - 2% above cash rates without significantly changing the risk profile of their investment.
As a matter of course our portfolios are typically less liquid than many traditional fixed income assets, such as Term Deposits, Bank Bills or Government Bonds. Where additional liquidity is needed this can be arranged, however may affect the return that can be achieved by the portfolio.
Unlike traditional fixed income portfolio managers, we believe that fixed income markets are relatively efficient at pricing individual securities relative to their peers when viewed at specific points on the yield curve. However we believe that yield curve liquidity premiums are often detached from reality: often overpricing this liquidity premium over short and medium horizons, while underpricing liquidity over very long horizons. Moreover, we believe that default risk can be effectively offset by by pairing securities and strategies that share a negative correlation to economic barometers, such as pairing Government bonds with investment grade credit (i.e., interest rate and market risk premiums).
By identifying these inefficiencies we believe that patient investors have an opportunity to generate long-term returns consistently 1% - 2% above cash rates without significantly changing the risk profile of their investment.
As a matter of course our portfolios are typically less liquid than many traditional fixed income assets, such as Term Deposits, Bank Bills or Government Bonds. Where additional liquidity is needed this can be arranged, however may affect the return that can be achieved by the portfolio.
Our Portfolios
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TSA150
TSA150 portfolios are designed with the objective of outperforming the Australian Reserve Bank of Australia's Official Cash Rate by 150 basis points (1.5%) or more, net of Asset Management Fees, over rolling 18-month periods, The strategy is focused on capital preservation while generating a positive return above both inflation and 150 basis points above the RBA Official Cash Rate, whichever is higher. To achieve this the strategy actively manages risk and maintains sufficient liquidity reserves to ensure that defensive action can be taken if, and when, needed. The portfolio is designed to ensure that no less than 5% of the portfolio's gross assets are accessible within 72 hours, and 15% is accessible within 32 days. The portfolio targets a duration of less than 2.5 years and a minimum of 95% of the portfolio's securities are rated Investment Grade or above. |
TSA200
The TSA200 portfolios are designed with the objective of outperforming the Australian Reserve Bank of Australia's Official Cash Rate by 200 basis points (2.0%), net of Asset Management Fees, or more over rolling 3-year periods. The strategy employs an active risk management framework, with a specific focus on managing interest rate, inflation, duration and reinvestment risk over the term of investment. No less than 90% of the portfolio's securities are rated Investment Grade or above. The portfolio targets a duration of less than 3.0 years. Although the total portfolio is designed as a long-term fixed income vehicle, and therefore should be treated as such, liquidity reserves are managed to ensure no less than 15% of the portfolio is accessible within 90 days. |
Fees
Our fees are structured in a manner that ensures fairness, transparency and consistency. Portfolio fees are comprised of two components:
1. Asset Management Fee: calculated as a flat rate of 0.27% per annum on the TSA150 strategy, and 0.35% per annum on the TSA200 strategy. Fees are payable quarterly in advance.
2. Consultant Retention Fee: A Consultant Retention Fee of $4,400 per annum ($1,100 per quarter) is also payable on all managed fixed income strategies, regardless of size. Fees are payable quarterly in advance.
All fees are listed inclusive of 10% GST
Please note: TSA Fixed Income strategies are currently closed to new investors. To register your interest for future openings please contact us.
1. Asset Management Fee: calculated as a flat rate of 0.27% per annum on the TSA150 strategy, and 0.35% per annum on the TSA200 strategy. Fees are payable quarterly in advance.
2. Consultant Retention Fee: A Consultant Retention Fee of $4,400 per annum ($1,100 per quarter) is also payable on all managed fixed income strategies, regardless of size. Fees are payable quarterly in advance.
All fees are listed inclusive of 10% GST
Please note: TSA Fixed Income strategies are currently closed to new investors. To register your interest for future openings please contact us.
