Reflecting on learnings of how the TM Gravis Digital Infrastructure Income Fund behaves through a market cycle, we have concluded that an opportunity exists to increase yield and reduce volatility, without changing the underlying investment philosophy. This will be achieved through the addition of short-duration bonds to the portfolio, expressing the same fundamental views of the strategy in a different part of the capital structure.

Below is a Q&A on the changes we have made.

The changes reflect what we have learned about how this strategy behaves through a market cycle. Following a structured review, which looked at the Fund’s risk/return characteristics and drawdowns, as well as client feedback, we decided to make the Fund more resilient, reduce volatility and increase its yield by adding some short-dated corporate bonds.

No, the core objective remains the same: to offer investors exposure to companies which own the physical assets that are vital to the digital economy. Adding up to 20% in short‑dated corporate bonds from three digitalisation property sub-types allows us to use the full capital structure of companies we already know well. The aim is to improve the Fund’s income and reduce its volatility, making it a better long‑term holding for retail investors.

Adding bonds from the same issuers we already know well lets us express the same fundamental views in a different part of the capital structure. Short‑dated bonds can provide a higher income and lower volatility.

Bonds are also an area of expertise for Gravis. Our flagship product, GCP Infrastructure Investments Limited is an infrastructure debt strategy. We have also included a small number of bonds in the TM Gravis UK Infrastructure Income Fund since its launch in 2015. So this addition leans into our specialism and the experience of the wider Gravis team.

The Fund will primarily invest in bonds issued by companies already in, or eligible for, the equity portfolio. That means:

• Short‑duration corporate bonds (around 4‑year average maturity).
• A mix of investment‑grade and high‑yield issuers, but all within our existing research universe.
• Bonds that we intend to hold to maturity, rather than trading aggressively.

This approach ensures we are not stretching into unfamiliar credits simply to pick up yield.

We have a 20% limit in place, which is the flexibility provided by the sector definition (IA Listed Property). We believe this is more than enough to have a meaningful impact on yield and volatility, while keeping the Fund firmly security‑led and avoiding style drift.

The initial fixed income allocation will be 15%-16%. This creates a tolerance for a 20% fall in the value of equities, without breaching the sector requirements. There will likely be 6-8 individual positions of 2-2.5%, consistent with the general position sizing allocations of the Fund.

We think it is a good time to start adding public bonds into equity portfolios as a diversifier. Even though credit spreads are tight, we do not see a strong case for a sharp or sustained widening in the near term, given still-solid fundamentals and supportive demand for yield.

Importantly, spread is only a relatively small component of total bond returns, so cash price performance is generally less sensitive than equities to macro shocks. As a result, even if spreads do widen, we would expect the impact on bonds to be meaningfully smaller than the potential downside in equities in a risk-off scenario.

Finally, we have also been able to enhance yield by investing across bonds in different currencies and hedging back into sterling, allowing for a more global and diversified exposure.

Overall, this makes public bonds an attractive way to reduce portfolio volatility while remaining invested in digital infrastructure assets.

We have expanded the team. Matt Norris retains overall responsibility for security selection and capital allocation of the Fund, supported by senior research analysts James Peel and Shayan Ratnasingam.

Albane Poulin, Gravis’s Head of Private Credit, joins the team, adding her expertise to the bond selection. Albane joined Gravis in 2023 and has 20 years of experience investing in credit, having begun her career as a credit analyst on the public bonds market. Prior to joining Albane worked at Aberdeen, where she was Head of European Private Placements and the lead fund manager of the Secure Income and Cash Flow Fund investing across both public and private credit market. During her time at Aberdeen, Albane worked across a range of public bond strategies within the firm’s fixed income platform which encompassed more than £130bn of assets under management. She currently oversees activities in private credit across GCP Infrastructure Investments and GCP Asset Backed Income.

Yes. The goal is to increase yield and reduce volatility by adding short duration credit in the three digitalisation property sub-types. Of course, bonds bring their own risks (particularly credit risk), but we believe these are well understood and manageable when you stay short‑duration, maintain diversification and focus on companies you already know well from the equity side.

Our preferred currency is GBP as this is the Fund’s base currency and there is no FX risk to holding these bonds. However, where we see better investment opportunities in non-sterling bonds, we will hedge the currency exposure.

We will adhere to the 5/10/40 rule applied to the issuer. No single issuer (debt + equity combined) will be >10%, and the sum of positions >5% ≤ 40%.

No, there are no changes to the fees or dealing terms. The Fund will remain a daily‑dealt, retail UCITS vehicle.

Important information

This article is issued by Gravis Advisory Limited (“GAL” or the “Firm”)), which is authorised and regulated by the Financial Conduct Authority. GAL’s registered office address is 24 Savile Row, London, United Kingdom, W1S 2ES. The company is registered in England and Wales under registration number 09910124.

TM Gravis Digital Infrastructure Income Fund (the “Fund”) is a sub-fund of TM Gravis Funds ICVC, which is a UK UCITS scheme and an umbrella company for the purposes of the OEIC Regulations.

The Authorised Fund Manager of TM Gravis Funds ICVC is Thesis Unit Trust Management Limited (TUTMAN), Exchange Building, St John’s Street, Chichester, West Sussex, PO19 1UP. TUTMAN is authorised and regulated by the Financial Conduct Authority. GAL is the investment manager of the Fund.

Any decision to invest in a Fund must be based solely on the information contained in the Prospectus, the latest Key Investor Information Document and the latest annual or interim report and financial statements.

GAL does not offer investment advice and this article should not be considered a recommendation, invitation or inducement to invest in a Fund. Prospective investors are recommended to seek professional advice before making a decision to invest.

Your capital is at risk and you may not get back the full amount invested. Past performance is not a reliable indicator of future results. Prospective investors should consider the risks connected to an investment in a Fund, which include (but are not limited to) exchange rate risk, counterparty risk, inflation and interest rate risk and volatility. Please see the Risk Factors section in the Prospectus for further information.

This article has been prepared by GAL using all reasonable skill, care and diligence. It contains information and analysis that is believed to be accurate at the time of publication but is subject to change without notice. It is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. Any recipients outside the UK should inform themselves of and observe any applicable legal or regulatory requirements in their jurisdiction.