Perpetual Credit Income Trust (PCI) $1.10

PCI targets a total return equal to the RBA Cash Rate plus 3.25% pa (net of fees). It can invest in a broad cross-section of credit, including corporate and government bonds and private credit. It has a broader mandate than just one area (such as private credit), which has seen an explosion of new funds in recent times. There are several key reasons why we like PCI over and above other listed debt funds.

• They invest primarily in high-quality corporate debt, not smaller risker issuers. They are not concentrated in property or development funding, as many are in the private credit space.
• They have a higher degree of transparency than others; their portfolio is transparently priced so we know the value of what we are buying. Funds dominated by private credit securities typically hold them at par, which may not be a true reflection of their value.
• PCI use the ratings of external agencies, which provides oversight. While they also internally rate each security they hold, many others publish internal ratings to justify the quality of their book – we prefer externally rated securities.
• The maturity profile is shortish at 4.5 years, and the portfolio is a mature one, been around a while and the guys managing the portfolio appear conservative.
• Shares are trading around NTA of $1.10, with a management fee of 0.88% being okay.

We view this as a fairly conservative, diversified portfolio spanning a cross-section of fixed-income that has a greater chance of outperformance relative to an index-tracking fund in the current economic climate.