After several years of tightening, Australia’s policy backdrop has shifted enough for the RBA to ease again. On 12 August 2025, the Board lowered the cash rate to 3.60%, following a hold at 3.85% in July. Persistently modest deposit and government bond yields continue to erode income for savers and retirees, and reinvestment risk remains elevated as maturing term deposits roll into lower rates. In this environment, investors are increasingly rotating toward alternative fixed-income strategies designed to balance yield stability with capital preservation, such as diversified credit, private debt, and income-focused funds, aiming to secure steadier cash flows without taking equity-like risk.
Economic Conditions: Inflation Eases as Growth Cools
Following several years of rate hikes to rein in prices, Australia’s macro backdrop has turned sufficiently for the RBA to start loosening policy. Inflation has cooled to 2.1% in May 2025 from 2.5% earlier in the year, squarely within the Bank’s 2–3% target band, reducing the need for restrictive settings after the post-pandemic surge. At the same time, growth has softened: GDP rose just 0.2% in Q1 2025 versus 0.6% in Q4, and household spending remains weaker than anticipated. With momentum fading, the RBA’s emphasis has shifted toward supporting activity and preserving labour-market stability.
Against this backdrop, further easing looks likely. All four major banks now expect a 25-basis-point cut in July, a view echoed by most surveyed economists. If delivered, it would mark the third reduction of 2025 after moves in February and May, and a clear pivot from the tightening cycle of 2022–2023. The message is a measured transition to an easing phase aimed at cushioning the slowdown and preventing a sharper downturn.
From Cash Rate Cuts to Property Gains
Lower interest rates typically lift home values because cheaper mortgages expand borrowing capacity and attract more bidders into an already tight market. As costs fall, buyers return, budgets stretch, and the same homes draw higher offers. Evidence backs this up: CBA reports the RBA’s February cash-rate cut was followed by a 3.1% rise in dwelling prices. With competition intensifying, sellers gain pricing power and auctions clear at firmer levels. The effect is strongest in capital cities, where demand and turnover concentrate; Sydney and Melbourne often move first when financing conditions ease. Looking ahead, CBA expects additional RBA cuts in August and November to push prices higher—about 6% in 2025 and 4% in 2026. It also projects uneven gains across cities: roughly 8% in Brisbane, 7% in Perth, and 6% in Adelaide. Even so, Canstar’s Sally Tindall argues this is not a reason to delay easing. The durable solution is to expand supply—more listings and new construction, supported by planning reform and targeted government action—so demand meets new stock and price pressures moderate.
Alternative Investment Strategies in a Falling-Rate Cycle
The RBA’s move toward lower rates is forcing a rethink for savers and income-focused investors. As the cash rate declines, term deposits and sovereign bonds typically reset at thinner yields, magnifying reinvestment risk when maturities roll over. In response, wealth managers are shifting toward Alternative fixed-income exposures, such as corporate bonds, private debt, and structured credit, to help sustain portfolio income. With conventional products offering limited return, allocations to income-oriented alternatives such as REITs, actively managed bond funds, and private-credit strategies are rising. The policy pivot is prompting broad portfolio recalibration toward steadier, higher-yielding assets that can operate in a low-rate, low-inflation setting.
The Trivesta Protected Yield Fund (TPYF) is one such Alternative solution. It is structured to target dependable distributions with embedded capital-protection features, aiming to deliver stable cash flow while avoiding the lockups typical of fixed-term savings products. For investors seeking consistent income with an emphasis on capital preservation, TPYF offers a way to diversify beyond traditional cash and government bonds without embracing equity-like volatility.
Key features of TPYF include:
- 10% p.a. Target Return (Net of Fees): The fund aims to provide a 10% annual return through a fixed distribution structure.
- Monthly and Bonus Distributions: Investors receive 0.5% fixed monthly payments, with an additional 2% bonus payouts in both the sixth and twelfth months, ensuring regular and predictable income.
- Flexible Redemption: TPYF allows full redemptions on a monthly basis with no penalties, offering liquidity typically not available in conventional term deposits.
In a falling-rate environment, strategies like TPYF may offer a compelling balance between income generation and capital access, making them increasingly relevant in diversified portfolios.
RBA Policy Supports the Trivesta Protected Yield Fund’s Strategy
The Trivesta Protected Yield Fund (TPYF) is positioned as a fixed-income alternative for a falling-rate cycle. Instead of holding conventional bonds or cash, the fund allocates its entire portfolio to asset-backed secured notes issued by Trivesta Investment, with recourse to the fund’s assets. Proceeds support a rules driven FX program that trades highly liquid currency pairs using both technical signals and fundamental insights. TPYF targets a net return of 10% per annum and pays a fixed monthly distribution that is not pegged to the RBA cash rate—helping stabilise income as deposit and government-bond yields reset lower.
Risk is addressed through structural features and process discipline: the asset-backed note structure adds a layer of capital protection, while defined exposure caps and flexible liquidity terms support active risk control. As policy easing compresses traditional fixed-income yields, vehicles like TPYF become more relevant for income-oriented portfolios. For investors prioritising dependable cash flow, it illustrates how alternative strategies can help maintain yield through a low-rate phase—balancing return potential, access to funds, and protection of principal.
