Perhaps someone understands this fund better than me. Based on the latest Investment Update, the weighted average interest rate on the portfolio is 6.86% (excluding the much smaller SME portfolio, which doesn't have a specified interest rate). The management expense ratio is 0.72%. So, underlying earnings is 6.14%. However, the annualised distribution is equal to 17.52c (1.46c * 12) or 8.76% yield (17.52c / 200c (NTA)). What can account for the difference between the underlying earnings rate of 6.14% and the distribution yield of 8.76%? According to the PDS, they don't use leverage. Also, the NTA has remained steady at $2.00 since listing, so they're not returning capital.
The only thing I can think of is that they're trading within the portfolio of RMBS securities, and returning capital gains to shareholders, but I don't think they're doing that.
Any ideas?
Ann: Investment Update - June 2023, page-2
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