Kapstream benchmarks fund to cash rate

17 September 2019

Kapstream Capital has changed the benchmark of its $5.9bn Absolute Return Income Fund to more closely reflect the strategy of the fund and the manager.

The fund previously used a joint benchmark of 50% Bloomberg AusBond Composite Bond 0-3Yr Index and 50% Bloomberg AusBond Bank Bill Index.

Managers Steve Goldman, Raymond Lee and Dan Siluk had now changed this to the RBA Cash Rate.

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The RBA Cash Rate was cut twice earlier this year and stands at 1%, with the possibility of one further cut to 0.5% later this year, although the managers said they personally expected a third cut would not take place until 2020.

Kapstream said: “The RBA OCR more closely reflects the manager’s strategy and management of the portfolio and ensures closer alignment to the benchmark of peers. Importantly, the benchmark change will not alter the way the fund is managed, any portfolio positions, the fund’s investment objective nor its target return.”

The Kapstream Absolute Return Income Fund returned 3.6% over one year to 30 August, 2019 according to FE Analytics. The average of the two previous Bloomberg benchmarks returned 2.7% while the RBA Cash Rate returned 1.4% over the same period.

It has also cut the fund’s Class A management fee from 0.7% to 0.5% (inclusive of GST and net of RITC) as the previous fee was set under ‘different market conditions’. The reduction, therefore, reflected the firm’s focus on ensuring costs remain appropriate and in line with market expectations.

Both changes would take effect from 1 October, 2019.

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