Seed Financial Income Fund Active ETF Posts Minimal 0.13% MPI Tracking Error in Q2 2026

Implications of the 0.13% Tracking Error for SFIF Investors

During the April to June 2026 quarter, the Seed Financial Income Fund Active ETF achieved a quarterly MPI tracking error of 0.13%. This metric represents the standard deviation of the daily differences between the fund's actual NAV per unit and an estimated NAV constructed from the daily performance of the MPI holdings, using disclosed weights or midpoints of weight ranges where applicable.

A tracking error of 0.13% signifies a strong correlation between the fund’s disclosed portfolio attributes and its actual daily returns over the quarter. This figure offers investors a quantitative insight into the fund’s operational consistency during the reporting period. The company did not provide prior quarter tracking error figures in this release, so Trend Analysis cannot be performed based on this announcement alone.

Construction of the MPI Tracking Methodology for SFIF

According to the update, the MPI daily return is calculated as the weighted average return based on the midpoint of the daily disclosed MPI portfolio and relevant regional industry group proxies for each position. The fund’s actual daily NAV per unit is then compared against this estimated figure, with the differences forming the basis for the tracking error calculation.

When holdings are closed during the Australian trading day, proxy instruments and their price movements are substituted to estimate the end-of-day NAV. This ensures continuity in the calculation even when certain positions are not actively traded. The fund manager also notes that when weight ranges are disclosed, the midpoint used may not exactly match the actual position weight, which means the sum of estimated weights may not total exactly 100%. To address this, the estimated end-of-day NAV is adjusted to ensure the portfolio sums to 100% for tracking error computation.

Evolution Trustees’ Role as Responsible Entity for the Seed Financial Income Fund

Evolution Trustees Limited (ABN 29 611 839 519, AFSL 486217) serves as the issuer and responsible entity for the Seed Financial Income Fund Active ETF, which holds ARSN 678 888 821. In this capacity, Evolution Trustees is responsible for lodging quarterly MPI tracking disclosures with the ASX on behalf of the fund, ensuring compliance with the transparency framework applicable to active ETFs listed on the Australian Securities Exchange.

This quarterly MPI tracking announcement is a compliance disclosure rather than a performance report or investment advice. Evolution Trustees explicitly states it does not guarantee fund performance or the return of investor Capital, and that past performance is not indicative of future results. Investors seeking tailored advice are encouraged to consult a financial adviser and review the fund’s Product Disclosure Statement (PDS), any Supplementary PDS, and Target Market Determination, all accessible at www.seedfm.com.au.

Transparency Requirements Driving Quarterly MPI Reporting for Active ETFs

Active ETFs on the ASX follow a distinct disclosure regime compared to traditional index ETFs. Because active ETFs do not replicate a published index, they must regularly disclose Material Portfolio Information so that Market Participants — including market makers — can estimate the fund’s intraday value. MPI disclosures typically include holdings or weight ranges for each position, enabling third parties to approximate the fund’s NAV during trading hours.

The quarterly tracking error report, such as that issued by Evolution Trustees for SFIF, serves as a key accountability tool. It enables investors and market observers to evaluate how closely the fund’s actual performance aligned with the publicly disclosed MPI over the relevant period. A low tracking error, like the 0.13% reported for Q2 2026, suggests the MPI was an accurate proxy for the fund’s true NAV. Higher tracking errors may result from proxy instrument use, weight range midpoint approximations, or intraday Liquidity variations. Although the company did not provide benchmarks or peer comparisons, this figure is low relative to typical active management strategies.

Seed Funds Management’s Income-Oriented Approach Behind SFIF

The Seed Financial Income Fund Active ETF is managed by Seed Funds Management, contactable at +61 401 194 448. The fund’s name and structure suggest a focus on income generation consistent with an active fixed income or multi-asset income mandate, though this quarterly tracking update did not elaborate on the specific Investment strategy, asset classes, portfolio composition, or Yield objectives.

Investors wanting more detailed information about the fund’s investment approach, risk profile, and current holdings should consult the fund’s PDS and MPI disclosures available on the Fund Manager’s website at www.seedfm.com.au. This announcement did not disclose fund size, units on issue, distribution rates, or portfolio holdings, as these fall outside the scope of the quarterly MPI tracking report.

Impact of Proxy Instrument Substitution on Q2 2026 Tracking Calculations

A technical aspect of the tracking error methodology involves substituting proxy instruments for holdings that close during the Australian trading day. The update explains that proxy instruments and their price movements are used to estimate end-of-day NAV when direct trading data is unavailable. This practice is common for funds holding international or over-the-counter instruments that may not trade continuously during ASX hours.

Using proxies introduces potential divergence between estimated and actual NAV since proxies approximate underlying positions. The low 0.13% tracking error despite proxy use suggests the proxies closely mirrored the underlying positions’ behavior during the quarter. However, the company did not specify which proxies were used, how often substitutions occurred, or the portfolio proportion requiring proxy coverage.

Adjustments for Weight Range Midpoints and Their Effect on Reported Figures

The update also highlights how weight ranges disclosed in the MPI are handled. When a position’s weight is given as a range rather than a precise figure, the midpoint is used for estimated NAV calculations. As noted, this midpoint may differ from the actual position weight, resulting in estimated weights not summing exactly to 100%.

To correct this, the estimated end-of-day NAV is proportionally adjusted so the portfolio totals 100% before calculating tracking error. This normalization ensures meaningful comparison between estimated and actual NAV but means the 0.13% tracking error reflects a modeled portfolio rather than a direct position-by-position match. The company did not disclose how many positions had weight ranges or the average deviation between midpoints and actual weights during Q2 2026.

Future Disclosure Schedule and Guidance for SFIF Investors

As an active ETF, SFIF will continue issuing quarterly MPI tracking reports in accordance with ASX Listing Rules. The next report is expected to cover 1 July to 30 September 2026, with filing anticipated in early October 2026. Investors may wish to track these disclosures over time to observe whether tracking error remains consistent, improves, or increases amid changing market conditions.

Alongside quarterly reports, investors should monitor any updates to the fund’s PDS, Target Market Determination, or investment strategy, as these may impact risk and return profiles. For inquiries about the fund or this disclosure, Evolution Trustees can be reached at +61 2 8866 5150, and Seed Funds Management at +61 401 194 448. The announcement’s immediate effect on SFIF’s share price was unclear, as it represents a routine compliance filing rather than a material operational or financial update.

Regulatory Disclaimer Relevant to the SFIF Quarterly Update

The quarterly MPI tracking report was prepared and issued by Evolution Trustees Limited in its role as responsible entity and issuer of the fund. It includes standard regulatory disclaimers applicable to Australian financial services communications, emphasizing that the information is general in nature and does not constitute personal financial advice. It does not consider individual investor objectives, financial situations, or needs.

Evolution Trustees also disclaims any warranty regarding the accuracy or completeness of third-party information and accepts no Liability for losses arising from reliance on this information to the extent permitted by law. These disclaimers align with Australian Financial Services Licence obligations. Investors are advised to seek independent financial advice before making investment decisions concerning the Seed Financial Income Fund Active ETF.