AUS
NZ
UK
CA
USA
IND
Alternative Investment Trust (AIQ), managed by Warana Capital, recorded a 2.1% increase in Net Tangible Asset (NTA) backing per unit in June 2026, reaching AUD 1.5212 per unit. This growth was largely fueled by strong returns from the WSS Master Fund, which rose 2.54% in US dollar terms during the month. The trust also broadened its foreign exchange hedging program and completed two new fund acquisitions as part of its ongoing secondary market investment strategy.
Key Points
- AIQ is an ASX-listed managed investment scheme overseen by Warana Capital and One Managed Investment Funds Limited, focusing on secondary market fund acquisitions and illiquid asset recovery.
- In June 2026, NTA per unit rose 2.1% to AUD 1.5212, while Adjusted NTA per unit increased 2.2% to AUD 1.4311, supported by a 2.54% USD return from the WSS Master Fund.
- The trust completed two investments in June: an additional USD 2.5 million into the WSS Master Fund and acquisitions in Warana 2019 and 2021 Funds totaling approximately USD 274,000 and USD 2.0 million respectively.
- AIQ expanded its FX hedging program in early June, now maintaining near full hedging relative to Adjusted NTA, complementing existing AUD 71 million USD hedges to reduce AUD/USD volatility.
- A quarterly distribution of about AUD 0.03578 per unit was declared for payment on 18 August 2026, equating to 2.5% of June’s Adjusted NTA and aligning with the trust’s 10% annual distribution policy.
WSS Master Fund Leads Monthly Performance and Portfolio Allocation
The WSS Master Fund, AIQ’s largest holding valued at AUD 54.2 million or roughly 60% of total assets, was the main contributor to positive returns in June 2026. The fund’s 2.54% increase in USD terms directly supported the trust’s NTA growth to AUD 1.5212 per unit. This highlights the importance of AIQ’s lending fund strategy within its portfolio, which prioritizes illiquid assets acquired at discounts to estimated recovery values.
Beyond the WSS Master Fund, AIQ holds a diversified portfolio including secondary market funds, primary market funds, and direct assets. The secondary market funds portfolio, valued at AUD 28.3 million on an Adjusted NTA basis, comprises the Warana 2023 Fund (AUD 11.7 million), Warana 2021 Fund (AUD 9.7 million), Warana 2019 Fund (AUD 4.4 million), and King Street Special Investments (AUD 2.4 million). Primary market funds total AUD 2.9 million, including the King Street Real Estate Fund and legacy AIQ holdings. Direct assets, such as the Alternative Liquidity Fund listed on the London Stock Exchange, net foreign exchange hedging value, and net cash equivalents, represent AUD 5.4 million of the portfolio.
Geographic Diversification with Emphasis on North America
AIQ’s portfolio maintains significant exposure to North America, accounting for 67% of the trust’s geographic allocation on a look-through basis. This reflects Warana Capital’s investment thesis favoring developed market absolute return funds, particularly in the United States and Canada. The remainder includes Europe at 22%, emerging markets at 9%, other developed markets under 1%, and net cash plus hedging positions at 2%.
Warana Capital estimates this geographic breakdown based on available data, noting that underlying funds operate across multiple markets and may independently rebalance exposures. This diversification aligns with AIQ’s objective to deliver attractive pre-tax risk-adjusted absolute returns over the medium to long term while focusing on capital preservation. Given the illiquid nature and extended holding periods of secondary market fund interests, geographic diversification serves as a key risk management tool.
Expanded Currency Hedging Program Mitigates USD Exposure Risks
In early June 2026, AIQ expanded its foreign exchange hedging program to reduce AUD/USD exchange rate volatility. This increased total USD hedges to approximately AUD 71 million, nearing full hedging relative to Adjusted NTA. The move reflects management’s strategy to manage currency risk amid substantial USD-denominated asset exposure and Australian dollar volatility.
During June, the AUD/USD rate dropped 3.7%, from about USD 0.7160 in May to USD 0.6920 at month-end. Despite this headwind, the hedging program limited the negative impact on AIQ’s unit price to roughly 0.7%, demonstrating the effectiveness of the currency overlay strategy. The portfolio shows 97% of investments and 86% of cash denominated in USD, with 92% of total currency exposure hedged against AUD/USD fluctuations. This approach protects investor returns from short-term Australian dollar movements relative to the US dollar.
Secondary Market Fund Acquisitions and Capital Deployment
In June 2026, AIQ completed two key investment transactions as part of its capital deployment plan. It invested an additional USD 2.5 million in the WSS Master Fund, reinforcing its largest holding and primary performance driver. Concurrently, AIQ acquired fund interests in the Warana 2019 Fund and Warana 2021 Fund for approximately USD 274,000 and USD 2.0 million respectively, continuing active secondary market investments.
These investments followed a May 2026 capital raising and demonstrate Warana Capital’s expertise in acquiring and managing secondary market funds. The acquired funds are typically illiquid with uncertain recovery timelines, requiring specialized valuation and portfolio management. The timing and size of these purchases indicate management’s confidence in the value and recovery potential of secondary market fund acquisitions.
Distribution Policy and Tax Loss Benefits for Investors
AIQ declared a quarterly distribution of approximately AUD 0.03578 per unit payable on 18 August 2026, equal to 2.5% of the June Adjusted NTA. This aligns with the trust’s policy of distributing 10% per annum of Adjusted NTA in quarterly installments, subject to cash availability. The policy balances regular income for unitholders with flexibility for ongoing secondary market investments.
AIQ holds over AUD 400 million in accumulated tax losses and more than AUD 20 million in capital losses as of the 2024 tax year. Subject to legislative conditions, these losses may offset future taxable income, potentially reducing or eliminating taxable income distributions. This tax loss position enhances distribution tax efficiency for Australian investors.
Unit Buyback Program Supports Capital Management
In June 2026, AIQ repurchased 478,757 units at an average price of about AUD 1.3924 per unit under its buyback policy. This capital management measure benefits remaining unitholders by reducing outstanding units and offsetting dilution from past capital raises. As of 30 June 2026, AIQ had 59,640,749 units on issue, reflecting prior placements, rights issues, and distribution reinvestment plans since the strategy’s restart in February 2018.
Buybacks executed below NTA per unit enhance per-unit backing for continuing investors by purchasing units at a discount. Previous capital raises issued units at times below NTA, causing dilution. AIQ reports both "Diluted" returns, including dilution effects, and "Undiluted" returns adjusted for dilution, providing transparency on performance under different capital scenarios.
Adjusted NTA Valuation and Secondary Market Fund Adjustments
AIQ reports both standard NTA and Adjusted NTA per unit, the latter reflecting valuation adjustments based on Warana’s estimated recovery cash flows discounted at 10% per annum for secondary market fund holdings. As of 30 June 2026, NTA per unit was AUD 1.5212 versus Adjusted NTA per unit of AUD 1.4311, a 5.9% difference attributable to secondary market valuation adjustments.
This dual valuation approach addresses the illiquid portfolio’s recovery timing uncertainty. The Adjusted NTA incorporates projected cash flows discounted to reflect time value and risk. Warana Capital introduced Adjusted NTA reporting starting 31 October 2019 to better assess performance. In June 2026, Adjusted NTA per unit rose 2.2% compared to 2.1% for standard NTA, reflecting WSS Master Fund gains’ impact across valuation methods.
Performance Metrics, Capital Raise Dilution, and Historical Returns
AIQ presents performance across multiple periods including 1 to 5 years annualized, since investment strategy restart on 12 February 2018, and since Warana Capital’s appointment on 9 October 2017. This comprehensive reporting allows investors to evaluate consistency and performance relative to the trust’s operational history.
Returns disclose dilution effects from units issued below NTA in capital raises, which have reduced per-unit backing. "Diluted" returns include these effects, while "Undiluted" returns adjust for them. The trust cautions that past performance is not indicative of future results, providing context for investors assessing AIQ’s objective to deliver attractive pre-tax risk-adjusted absolute returns over the medium to long term.
Responsible Entity and Investment Manager Infrastructure
One Managed Investment Funds Limited (One Investment Group), holding AFSL 297042 and ABN 47 117 400 987, serves as AIQ’s Responsible Entity. One Investment Group is an independent funds manager providing Responsible Entity, Trustee, Custody, and Administration services across approximately 680 managed investment schemes with over AUD 80 billion in assets under administration. This infrastructure supports AIQ’s portfolio management and unit holder administration.
Warana Capital Pty Limited, holding AFSL 493579, acts as AIQ’s Investment Manager, specializing in acquiring and managing secondary market fund portfolios. Warana’s expertise in sourcing illiquid fund interests at discounts underpins AIQ’s strategy since Warana’s appointment on 9 October 2017. The combination of Warana’s niche focus and One Investment Group’s operational support forms the foundation for AIQ’s investment strategy execution.
