6 July 2020

As investors seek alternative sources of yield, many are recognising that investing in directly originated private loans to Australian companies can generate an important source of alternative income.

In response to this increasing demand, Australia’s leading non-bank corporate lender Metrics Credit Partners (Metrics) has launched a new unlisted private debt fund.

The Metrics Direct Income Fund seeks to provide investors with returns of 3.25% a year above the Reserve Bank of Australia cash rate, which is currently 0.25% (for a total target return of 3.50%). Income is expected be paid to investors monthly.

The fund provides access to the Australian corporate debt market, through an investment exposure to a diversified portfolio of loans to more than 150 Australian companies.

Successive rate cuts mean some investors in cash and Australian government bonds are receiving returns that are below the annual rate of inflation – potentially losing money on every dollar they have invested (in real returns).

Andrew Lockhart, Managing Partner at Metrics, suggested these investors consider an investment providing exposure to corporate loans, which can offer more attractive risk-adjusted returns.

“The Australian corporate loan market is an attractive opportunity that should be considered by investors, seeking to provide superior risk-adjusted returns compared to asset classes such as bonds.

Like all fixed income, it helps to provide portfolio diversification, along with a stable cash yield with low risk of capital loss compared to equities.

This is particularly important for retirees, who generally need to generate regular income to fund their lifestyle needs, while also protecting their capital base,” he said.

Mr Lockhart noted that many equity investors had recently seen their income cut as companies have reduced their dividend payments.

“This fund seeks to provide an alternative source of income for investors,” he said.

The Metrics Direct Income Fund is managed by an experienced and active management team with a proven track record in originating, structuring, negotiating, managing and distributing private debt.

Metrics, established more than seven years ago, has built a highly skilled team expert in providing loans to Australian companies.

“In a low-rate and low-yield environment, the Metrics Direct Income Fund provides a potential investment option for investors – such as retirees and self-managed super funds – to replace their declining dividend and interest returns with an alternative source of income,” Mr Lockhart concluded.

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More information about the Metrics Direct Income Fund can be found here.

Disclaimer

This communication is prepared by Metrics Credit Partners Pty Ltd (ABN 27 150 646 996 AFSL No. 416 146 (Metrics) and is issued by Evolution Trustees Limited (ACN 611 839 519 and AFSL No. 486217) (Evolution) the responsible entity and the issuer of the units in the Metrics Direct Income Fund ARSN 637 459 968 (Fund).

The information provided in this communication is of a general nature only, does not constitute financial product advice and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of the Fund, you should read and consider the current product disclosure statement for the Fund (PDS) carefully and in its entirety and assess whether the Fund is appropriate given your objectives, financial situation or needs. If you require advice that takes into account your personal circumstances, you should consult a licensed or authorised financial adviser. The PDS is available at www.metrics.com.au.

Neither Evolution nor Metrics guarantees repayment of capital or any particular rate of return from the Fund and the value of your investment may rise or fall. Neither Evolution nor Metrics gives any representation or warranty as to the reliability, completeness or accuracy of the information contained in this communication. To the maximum extent permitted by law, Metrics disclaims all and any responsibility or liability for any loss or damage which may be suffered by any person relying upon any information contained in or omission from this communication. All opinions and estimates included in this communication constitute judgments of Metrics as at the date of this communication and are subject to change without notice. Past performance is not a reliable indicator of future performance. Target returns are targets only and may not be achieved.