Colchester fund edges ahead of benchmark as ASX ETF launches

• FY2026 returns of 2.32% to 2.48% across Classes A, I and R
• All reported classes exceeded the 2.16% FTSE benchmark
• Net assets fell to $1.086 billion from $1.124 billion
• ETF Class began ASX quotation on 29 July 2026
• Interest-rate sensitivity widened to $128.5 million for a 200-basis-point move

Existing unit classes outperform the benchmark

Colchester Global Government Bond Fund (ASX:CIS) cleared its benchmark across every reported class in the year to 30 June 2026. Class A returned 2.33% net of fees, Class I returned 2.32% and Class R returned 2.48%, compared with a 2.16% gain for the FTSE World Government Bond Index hedged into Australian dollars.

The margin was modest but consistent: between 16 and 32 basis points across the three classes. The fund’s net assets nevertheless declined to $1.086 billion from $1.124 billion, reflecting the effect of applications, redemptions, distributions and investment performance rather than a simple measure of returns. Class I remained the largest pool, closing with $953.2 million in net assets, while Class R ended at $95.6 million and Class A at $37.6 million.

ETF class adds an ASX access point

The fund issued its ETF Class on 3 July 2026, after the reporting period, and it began quotation on the ASX on 29 July. That gives investors a listed route into a portfolio built around government bonds and currencies, alongside the fund’s existing unlisted classes. The annual report does not provide post-listing assets, turnover or bid-ask spreads, leaving the ETF’s early scale and trading quality untested in this filing.

Market gains fell as derivatives weighed

Profit before finance costs attributable to unit holders dropped to $26.4 million from $53.3 million. Interest income increased to $45.4 million from $42.1 million, but the fund recorded a $12.6 million net loss on financial instruments at fair value through profit or loss, compared with a $17.6 million gain a year earlier. Management fees and costs rose to $6.77 million, although the report does not attribute the year-on-year earnings change to any single factor.

The fund paid or declared $71.15 million in distributions during the year, more than double the prior year’s $34.72 million. Cash from operating activities swung to a $36.95 million inflow from a $77.32 million outflow, while applications and redemptions were broadly balanced at $245.9 million each. At year-end, the portfolio held $1.115 billion in fixed-interest securities and $33.1 million in cash.

Interest-rate exposure is the key risk marker

The report puts the portfolio’s rate sensitivity in sharp relief. A parallel 200-basis-point rise in interest rates was estimated to reduce net assets by $128.5 million, with an equivalent fall producing a positive $128.5 million sensitivity. That compares with a $21.6 million sensitivity in either direction a year earlier, although the reported scenario is a stress test rather than a forecast.

Foreign-exchange sensitivity also increased, with a 10% move in material currencies estimated to affect net assets by $17.8 million in either direction, versus $3.5 million in 2025. Forward currency contracts had $37.1 million of liabilities at year-end, up from $11.1 million, and the portfolio included $27.3 million of BB-rated debt securities despite the fund’s broader investment-grade holdings. Deloitte issued an unmodified audit opinion, with no material post-year-end event reported beyond the ETF launch.

Bottom Line?

The benchmark-beating result is encouraging, but the new ETF’s investability and the much larger interest-rate sensitivity are the next practical tests for investors.

Questions in the middle?

• How much capital and daily liquidity has the ETF Class attracted since its ASX debut?
• What portfolio changes drove the interest-rate sensitivity from $21.6 million to $128.5 million?
• Can the fund maintain benchmark outperformance while managing higher derivative liabilities and currency exposure?