Decreased forced institutional selling and lower market volatility drove the Elstree Enhanced Income Fund to a return of +1.31% in January, while the Elstree Australian Enhanced Income Fund was up +1.05%.
More specifically, both funds benefited from an underweight position in the banking sector, which underperformed the market as a whole. As interest rates continue to decline, and amid dividend and corporate profit uncertainty, the manager believes the search for income sources will be key to the funds' prospects over the medium term. They are encouraged by improving credit conditions globally, and with a greater stability in prices expect investors to become less risk averse in areas such as ASX listed hybrids. This combined with the decreased returns from deposits and dividends will further bolster the funds' prospects.
