FirstWrap Commentary – March 2023 Quarter

by Chris Limberg on Mar 31, 2023

FirstWrap commentary – March 2023 Quarter

During the quarter the RBA increased the cash rate another 2 times by 0.25% each time. This was the 10 consecutive rate increase from the RBA taking the cash rate to 3.6%. The April meeting saw rate remain on hold with no increase while the RBA looks for the effects of the rate increases to flow through the economy. The Equity markets had a positive quarter with the ASX200 up 1.98% for the March quarter. Markets remain volatile and the returns for the 12 months remain negative at            -4.29%.

Actions taken through the quarter:

  • During the quarter we maintained our overweight position in cash. Cash will provide protection in negative markets and the opportunity buy or average investments with market weakness. FirstWrap cash has a current yield of 2.92% p.a. with interest paid monthly.
  • Established a holding in Gryphon Capital Income Trust (ASX: GCI)
  • Monitored holdings in Macquarie Bank (MQG), MA Financial Group (MAF) and Soul Pattison (SOL).

New Investments Summary

Gryphon Capital Income Trust (GCI)

The Gryphon Capital Income Trust (ASX Code: GCI) is a listed trust designed to provide investors with sustainable, monthly income (Target Return equal to RBA Cash Rate + 3.50% pa) currently 7.1% p.a. through exposure to the Australian Securitisation market. This asset-class, primarily consisting of Residential Mortgage-Backed Securities (RMBS) and Asset Backed Securities (ABS), is a key pillar of the Australian fixed income market.

GCI February Investment update attached for full details.

Existing Investments Review

RBA cash rate increased 0.5% over the quarter which will result in an increase in yield for all the fixed income assets and cash within the portfolio.

  • Metric Income Opportunities Fund (MOT) Current running yield is 8.1% p.a.
  • Metric Direct Income Fund current running yield is 6.85% p.a.
  • Each of these paid 3 distributions into the FirstWrap cash account

MA Financial paid a fully franked dividend of 14c per share on 22nd March.

We continue to monitor the market closely and looking for the opportunity to add to the existing investment strategy as opportunities present.