Perpetual to wind up fixed income fund

Perpetual's Dynamic Fixed Income Fund will shutter next month as it failed to reach the required scale to operate in a cost-efficient manner.

The fund's investment manager Perpetual Investment Management told investors in a note that after careful consideration it decided to close and wind up the fund effective June 3.

The Dynamic Fixed Income Fund had $29.7 million at the end of 2025. It aimed to provide capital stability and regular income by investing in a range of income-generating assets, and a positive return before fees and taxes irrespective of market conditions over a rolling three-year period.

The fund returned 4.78% p.a. in three years and over 12 months achieved 3.21% p.a. It was benchmarked against the Bloomberg AusBond Composite and Bloomberg AusBond Bank Bill Index.

Nearly 66% of the portfolio is invested in senior debt and 26% in subordinated debt.

In a March investment update, the fund said the period "proved a challenging month for Australian fixed income, as geopolitical turmoil in the Middle East dominated sentiment and forced a significant repricing of the rate outlook."

"The US-Israel conflict with Iran effectively closed the Strait of Hormuz - a chokepoint for roughly 20% of global oil supply - sending oil prices sharply higher and reigniting stagflation concerns. The war created volatility across energy, rates, equities and credit markets as inflation was re-priced, as was central bank paths and recession risks," the fund said.

However, income return was a major contributor to performance over the month, offsetting the impact on rising bond yields.

At the time, the strategy continued to "collect a healthy running yield generated from the underlying fixed rate and floating rate income strategies alongside direct investments."

The Perpetual group reported total assets under management of $219.2 billion in the March quarter.

The $8.3 billion decrease from December was due to unfavourable currency movements of $3.6 billion, net outflows of $2.8 billion and negative market movements of $1.9 billion.