UltraShort Income Fund

Overview

AN INSTITUTIONAL APPROACH TO SHORT MATURITY INVESTING

The UltraShort Income Fund seeks to provide current income while seeking to minimize price volatility and maintain liquidity. The primary focus of Fund assets will be within the best relative value opportunities of structured credit, including RMBS, CMBS, ABS, and CLOs. The Fund may also include allocations to government bonds and agency-backed securities, which include U.S. Treasury securities, agency RMBS, and agency CMBS. We believe this combination of structured credit, U.S. Treasuries, and agency-backed bonds will provide balance to the Fund and enhance price stability. This top-down approach to asset allocation will seek to provide the Fund with superior income within the Ultrashort landscape, with a predominant focus on minimizing volatility.

The Fund’s average rate duration will be maintained below 1.0, while the average effective maturity will be maintained below 2.0 years.

INVESTMENT FOCUS

At least 80% of the Fund’s net assets will be invested in the following fixed income sectors:

  • Agency and non-agency residential mortgage-backed securities (RMBS)
  • Agency and non-agency commercial mortgage-backed securities (CMBS)
  • Asset-backed securities (ABS)
  • Collateralized loan obligations (CLOs)
  • U.S. Treasuries and agency debentures
  • Corporate credit

Performance

Total Returns (as of 12/18/18) NAV NAV Change Dollars NAV Daily Change (%) YTD (%)
Class I NAV $10.01 ($0.01) -0.10% n/a
Class A NAV $10.02 $0.00 0.00% 1.77%
Total Returns (as of 11/30/18) Prior Mo. YTD 1 Year 3 Years 5 Years Since Inception1
Class A NAV 0.25% n/a n/a n/a n/a n/a
Class I NAV 0.27% n/a n/a n/a n/a 2.05%
Bloomberg Barclays 9-12 Mo. U.S. T-Bill Index 0.22% n/a n/a n/a n/a 1.29%
Total Returns (as of 09/30/18) Prior Qtr. YTD 1 Year 3 Years 5 Years Since Inception1
Class A NAV 0.76% n/a n/a n/a n/a n/a
Class I NAV 0.82% n/a n/a n/a n/a 1.52%
Bloomberg Barclays 9-12 Mo. U.S. T-Bill Index 0.46% n/a n/a n/a n/a 0.88%

Expense Ratios*

  Class A Class I
Gross 0.86% 0.61%
Net 0.50% 0.25%

Performance data quoted represents past performance. Past performance is no guarantee of future results. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than what is stated. Short-term performance, in particular, is not a good indication of the Fund’s future performance and an investment should not be made based solely on returns. Performance is net of fees. 

1The inception date of the Angel Oak UltraShort Income Fund I Class (AOUIX) was 4/2/18, while the inception date of the A Class (AOUAX) was 4/30/18. The returns of AOUAX shown for periods prior to the inception date include the returns of AOUIX and are adjusted to reflect any applicable sales charges and the higher annual operating expenses of Class A.

*Gross expense ratios are reported as of the 5/31/18 prospectus. The net expense ratios are reported as of the 1/31/18 Annual Report and are referenced in the 5/31/18 prospectus. The Adviser has contractually agreed to waive fees through 5/31/19.

Record Date  Payable Date Reinvestment Price ($/share) Ordinary Income ($/share) ST Cap Gains ($/share) LT Cap Gains ($/share)
5/30/2018 5/31/2018 10.03 0.01842  –  –
6/28/2018 6/29/2018 10.02 0.01969  –  –
7/30/2018 7/31/2018 10.02 0.02154  –  –
8/30/2018 8/31/2018 10.03 0.02187  –  –
9/27/2018 9/28/2018 10.03 0.02211  –  –
10/30/2018 10/31/2018 10.03 0.02345  –  –
11/29/2018 11/30/2018 10.03 0.02458  –  –
Total 2018     0.15166    

Record Date  Payable Date Reinvestment Price ($/share) Ordinary Income ($/share) ST Cap Gains ($/share) LT Cap Gains ($/share)
4/29/2018 4/30/2018 10.01 0.01923  –  –
5/30/2018 5/31/2018 10.03 0.01909  –  –
6/28/2018 6/29/2018 10.01 0.02119  –  –
7/30/2018 7/31/2018 10.02 0.02363  –  –
8/30/2018 8/31/2018 10.03 0.02399  –  –
9/27/2018 9/28/2018 10.02 0.02386  –  –
10/30/2018 10/31/2018 10.02 0.02551  –  –
11/29/2018 11/30/2018 10.02 0.02671  –  –
Total 2018     0.18321    

Portfolio

  

 

Relative Sector Weights Fund4 Morningstar Category2 Benchmark3
RMBS 21.9% 5.5% 0.0%
CMBS 15.2 % 2.3% 0.0%
ABS 45.8% 18.6% 0.0%
Corporate 0.0% 39.5% 0.0%
CLO 13.4% 0.0% 0.0%
Agency/Government 0.0% 12.6% 100.0%
Cash, Equivalents, and Other 3.7% 21.5% 0.0%
Total 100.0% 100.0% 100.0%

1Modeled yield; unlevered gross yield to expected maturity calculated using the Fund’s current sector weights to approximate the total yield of the portfolio.
2Morningstar Ultrashort Bond Category as of 9/30/18.
3Bloomberg Barclays 9-12 Month U.S. Treasury Bill Index.
4As of 9/30/18.

 
AAA 55.4%
 
AA 22.4%
 
A 5.9%
 
BBB 1.6%
 
BB 3.7%
 
B 3.0%
 
Unrated 8.0%

As of 9/30/18.

The portfolio is actively managed. Holdings and weightings are subject to change daily and are provided for informational purposes only and should not be deemed as a recommendation to buy or sell the securities mentioned. Fund composition is based on net assets. Please scroll down to see important information about the Fund. Ratings determined by S&P. 

Management Team

Clayton Triick

Clayton Triick, CFA®

Lead Portfolio Manager

Investment industry since 2008
Read Bio

 
Sreeni Prabhu

SREENI PRABHU

Co-CEO and CIO

Investment industry since 1998
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Colin McBurnette

COLIN MCBURNETTE

Portfolio Manager

Investment industry since 2007
Read Bio

 
 

Fund Facts

Share Class Ticker CUSIP Inception Gross Expense Ratio*  Net Expense Ratio*
Class A AOUAX 03463K844 4/30/18 0.86% 0.50%
Class I AOUIX 03463K828 4/2/18 0.61% 0.25%

*The Adviser has contractually agreed to waive its fees to limit the Total Annual Fund Operating Expenses After Fee Waiver/Expense Reimbursement to 0.49% of the Fund’s average daily net assets through 5/31/19. In addition, the Adviser has voluntarily agreed to limit these expenses to 0.25% through 5/31/19; this expense limit is applicable to current investors.

Fund Commentary

Bloomberg Barclays 9-12 Month U.S. Treasury Bill Index: Measures the performance of U.S. Treasury bills, notes, and bonds with a remaining maturity between 9-12 months. The index does not include trading and management costs.

Effective Duration: Measures a portfolio’s sensitivity to changes in interest rates. Generally, the longer the effective duration, the greater the price change relative to interest rate movements.

It is not possible to invest directly in an index.

Must be preceded or accompanied by a prospectus. To obtain an electronic copy of the prospectus, please visit www.angeloakcapital.com.

Investing involves risk. Principal loss is possible. The Fund’s derivative investments have risks, including the imperfect correlation between the value of such instruments and the underlying asset, rate or index, which creates the possibility that the loss on such instruments may be greater than the gain in the value of the underlying asset, rate or index; the loss of principal; the possible default of the other party to the transaction; and illiquidity of the derivative investments. The Fund may invest in illiquid securities and restricted securities. Investments in restricted securities could have the effect of increasing the amount of the Fund’s assets invested in illiquid securities if qualified institutional buyers are unwilling to purchase these securities. Changes in interest rates generally will cause the value of fixed-income instruments held by the Fund to vary inversely to such changes. Below investment grade instruments are commonly referred to as “junk” or high-yield instruments and are regarded as predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal. Lower grade instruments may be particularly susceptible to economic downturns. The price paid by the Fund for asset-backed securities, including CLOs, the yield the Fund expects to receive from such securities and the average life of such securities are based on a number of factors, including the anticipated rate of prepayment of the underlying assets. Mortgage-backed securities are subject to the general risks associated with investing in real estate securities; that is, they may lose value if the value of the underlying real estate to which a pool of mortgages relates declines. See the prospectus for a more detailed description of Fund risks.

Diversification does not guarantee a profit or protect against a loss in declining markets.

The Morningstar Ultrashort Bond Category average represents an average of all of the funds in the Morningstar Ultrashort Bond Category.