We wish to provide investors with the following update relating to distributions for the
Janus Henderson Australian Fixed Interest Fund (ARSN 087 719 739, APIR IOF0046AU) and
Janus Henderson Australian Fixed Interest Fund – Institutional (ARSN 100 098 413,
APIR IOF0113AU), hereafter ‘the Funds’ collectively.
As Responsible Entity for the Funds, Janus Henderson Investors (Australia) Funds Management Limited does not anticipate that either of the Funds will make a distribution for the period ended 31 December 2023.
Distributions in all actively managed fixed income funds can vary and are influenced by factors including market movements, as well as realised profit and loss from active trading in securities, interest rate and credit derivatives, hedging, and overall risk management.
As with many actively managed fixed income funds, during the pandemic years of 2020 and 2021, the Funds made significant changes to their portfolios, which resulted in substantial realised gains as bond yields were at their lowest. These gains were distributed as income to investors in 2020 and 2021 accordingly.
As yields have rapidly moved higher over the past 24 months, the Funds have begun to participate in higher income via coupons on newer securities purchased. In due course, this will increase the natural income production of the Funds.
Given the recent sharp rise in bond yields which has led to underlying market prices for bonds and derivatives decreasing, the realised losses in the Funds are offsetting the income generated from their underlying assets. This is in part due to the lower coupons from securities purchased when yields were lower.
Whilst this is an unusual outcome, the speed with which bond market yields have reset has impacted the distributable income of the Funds. Importantly, investors should take comfort that the higher level of underlying income generated by securities held within the Funds is now being reflected in the unit price. These developments do not impact the total returns investors participate in, but rather the split between distributable income and growth in the unit price.
As yields increase, we expect higher levels of income from high-quality bonds to flow through which should increase the distribution profile of the Funds.
Based on current yields and income generation, we expect distributions to resume some time following the June quarter 2024 period, depending on market conditions. This timeline is intended to be indicative only, and may be impacted by variables including market movements, flows, income and the direction of capital prices.