Metrics launches new unlisted Australian fund in response to strong demand

In response to increasing demand from investors, Australia’s leading non-bank corporate lender, Metrics Credit Partners, launched a new unlisted private debt fund in July.

Andrew Lockhart, Managing Partner at Metrics, said that in the six months since launching, the Metrics Direct Income Fund has been well received by investors seeking reliable monthly income. It has also been listed as an approved product for financial advisors by investment platforms including BT, Netwealth, Macquarie, and Hub 24.

“As investors seek alternative sources of income, many are recognising that investing in directly originated private loans to Australian companies can generate superior risk adjusted returns compared with other fixed income or equity investments,” Mr Lockhart said.

“By investing in a Metrics managed fund, investors can access this attractive asset class via a well-diversified portfolio where credit risk is carefully and actively managed by a team of expert professionals with an eight-year track record of preserving capital and delivering above-target returns.”

Successive rate cuts mean some investors in cash and Australian government bonds are receiving returns that are below the annual rate of inflation – meaning they are losing money in every dollar in real terms.

The Metrics Direct Income Fund seeks to provide investors with returns of 3.25% p.a. (net of fees) above the Reserve Bank of Australia cash rate. Income is 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 140 Australian companies. As of December, the portfolio included loans to companies in a cross section of industries including real estate investment trusts, real estate management and development; hotels, restaurants and leisure; health care providers; energy companies; transport; and financial services.

Mr Lockhart said corporate loan investments have a low correlation with traditional asset classes such as listed equities, and help to provide portfolio diversification, along with a stable cash yield and 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 as the COVID-19 pandemic impacted financial markets in 2020, many equity investors experienced extreme equity market price volatility and also saw their income cut as companies reduced their dividend payments.

“During this period, Metrics funds continued to deliver monthly income for investors while preserving their capital, demonstrating the benefits of the asset class and the skills of the Metrics investment team,” he said.

The Metrics Direct Income Fund has delivered in excess of its target return since inception in July 2020.