SGH Enhanced Income Trust update – September quarter 2026

In this SGH Enhanced Income Trust update, Stratton Bell, Portfolio Manager of the SGH Enhanced Income Trust, discusses the impact of rising bond yields on Trust performance, recent portfolio positioning and opportunities emerging in fixed income markets. He also shares insights into the Trust’s focus on capital preservation, income generation and portfolio diversification.

Watch/Listen to the September Quarter 2026 SGH Enhanced Income Trust update ⏬:

Transcript:

Quarterly performance recap

Welcome everyone to the September quarterly update for the SGH Enhanced Income Trust. For the quarter ending 30th of September, we had a negative performance of 0.1% after fees versus the benchmark of 1.37%, which shows a net underperformance of 1.5%, reversing any of the alpha that we gained from the previous quarter.

The key drivers of performance

Unfortunately, the main driver of performance was entirely macro-driven. Looking at the portfolio, all fixed-rate bonds underperformed. For example, medium-term bonds, like the five-year bond, saw yields rise by 56 basis points to 4.9% over the quarter, driven by a variety of factors.

But the majority of it was due to the ongoing issues in the Middle East and the persistent inflation that we’re experiencing here from a macroeconomic perspective. When we look at the floating rate instruments, they performed exactly in line, and with the recent increase in interest rates, we saw the BBSW rise by 31 basis points to 4.77%.

So we look at the fixed income investments in the portfolio, and as I said, they did underperform, and that wasn’t due to any individual factors or an increase in credit risk from the portfolio. It was simply due to rising bond yields. While that’s negative, it also creates an opportunity going forward, because we believe fixed-rate bonds are at peak levels, and we expect yields to decline slowly over the next three years.

Current position of the fund

Given that we have been increasing the percentage of the portfolio to fixed rates investments, we would assume that the performance over the next three years will be positive as fixed rate bonds decline over time. We are slowly increasing our exposure to fixed rate bonds in the portfolio.

And other than that, there isn’t a huge level of change within the portfolio. All the instruments have performed pretty much in line with our expectations.

Why invest in the SGH Enhanced Income Trust now?

If I think about three reasons to consider investing in the SGH Enhanced Income Trust, first, the fund is set up for capital preservation. We have a long history of preserving capital, and our income thesis hasn’t changed over time.

Second, it’s a great diversifier for many portfolios, especially for individuals with large exposure to domestic or international equities.

Third, markets are volatile, politics are increasingly unstable, and this fund is built solely to preserve capital, offering the peace of mind many investors seek in these volatile times.

For more information about the SGH Enhanced Income Trust, click HERE. Follow us on LinkedIn.

*The text has been edited for clarity.

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Disclaimer

This fund update has been prepared by SG Hiscock & Company trading as SGHiscock Investment Management (SGHiscock) to provide general information only and is not intended to take the place of professional advice. It does not take into account the investment objectives, financial situation or particular needs of any particular person.

Equity Trustees is the responsible entity for the SGH Enhanced Income Trust. Neither SGHiscock, Equity Trustees nor any of its related parties provide any warranty of accuracy. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product. Follow the link for the full disclaimer: https://sghiscock.com.au/podcast-disclosures-and-disclaimers/.