Current Unit Price: (20 min. delayed price) ASX:MXT $2.05 -0.97%
NAV as at COB: 21.01.20 $2.0089
Current Unit Price: (20 min. delayed price) ASX:MOT $2.06 0.00%
NAV as at COB: 21.01.20 $2.0159

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Uncovering opportunities for yield-hungry investors


With traditional fixed income providing historic low yields, Andrew Lockhart of Metrics Credit Partners explains how to unlock attractive income opportunities from the asset class for investors.

As concerns continue to mount about the outlook for the global economy, many investors are seeking to dial back their equities exposure in favour of defensive, income-producing investments available through the ASX.

The domestic corporate bond market is one option, however, it has a number of limitations. The domination of the market by banks means there is little diversity on offer and the recent global bond market rally has sent prices higher, depressing yields. It is also a difficult market for retail and SMSF investors to access.

So where should investors look for income and diversification opportunities? We believe the answer lies in the corporate loan market, accessible through ASX-listed vehicles that provide both liquidity and diversification.

Direct corporate loans, a subset of fixed income, provide the potential for higher yield than corporate bonds – along with predictability and low volatility. Loans are also often secured by a borrower’s assets, offering a greater degree of investor protection than equities.

These types of loans currently make up 77 per cent of the Australian corporate debt market, meaning there are ample opportunities for investors to tap into the current high demand for non-bank funding.

 

Stringent research and borrower engagement

Metrics provides investors with access to the corporate loan market through two ASX-listed opportunities.

The MCP Master Income Trust (ASX: MXT) is a diversified portfolio of predominantly investment grade corporate loans, while the MCP Income Opportunities Trust (ASX: MOT) also offers higher risk junior debt and seeks to also provide investors with the opportunity to generate capital gains from investment in options, warrants or private equity investments.

Metrics takes the same approach across all investments and our comprehensive screening and due diligence process mean we only proceed with a relatively small number of loans. In the 2018-19 financial year, we only proceeded with 19 per cent of all screened transaction opportunities. We then undertake ongoing monitoring of portfolio risks to protect investor capital.

Additionally, we generally lend for relatively short periods of three to five years. This approach helps reduce credit and market risk, and enhances portfolio returns for investors.

With portfolio diversification, strong risk management and consistent target yields of 4 per cent to 10 per cent on offer, we believe the corporate loan market warrants a closer look from investors.

Investordaily – Online by Andrew Lockhart

Current Unit Price: (20 min. delayed price) ASX:MXT $2.05 -0.97%
NAV as at COB: 21.01.20 $2.0089
Current Unit Price: (20 min. delayed price) ASX:MOT $2.06 0.00%
NAV as at COB: 21.01.20 $2.0159

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Disclaimer and disclosure

All website content in respect of the MCP Master Income Trust ARSN 620 465 090 (the Trust) is issued by The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL 235 150 (Perpetual) as responsible entity of the Trust and is prepared by Metrics Credit Partners Pty Ltd ABN 27 150 646 996 AFSL 416 146 (Metrics) as the investment manager of the Trust.

The information provided in this website is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of the Trust, you should consider the current product disclosure statement (PDS) of the Trust and the Trust’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au/, and assess whether the Trust 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.

Neither Perpetual nor Metrics guarantees repayment of capital or any particular rate of return from the Trust. Neither Perpetual nor Metrics gives any representation or warranty as to the currency, reliability, completeness or accuracy of the information contained in this website. All opinions and estimates included in this website constitute judgments of Metrics as at the date of website creation and are subject to change without notice. Past performance is not a reliable indicator of future performance.

Cororate Governance
Personal Trading in Non-Perpetual Securities | RE Services Personal Trading in Non-Perpetual Securities | Unitholders Communications Policy | Continuous Disclosure Policy

The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned May/2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

Disclaimer and disclosure

All website content in respect of the MCP Income Opportunities Trust ARSN 631 320 628 (the Trust) is issued by The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL 235 150 (Perpetual) as responsible entity of the Trust and is prepared by Metrics Credit Partners Pty Ltd ABN 27 150 646 996 AFSL 416 146 (Metrics) as the investment manager of the Trust.

The information provided in this website is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of the Trust, you should consider the current product disclosure statement (PDS) of the Trust, and the Trust’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au, and assess whether the Trust 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.

Neither Perpetual nor Metrics guarantees repayment of capital or any particular rate of return from the Trust. Neither Perpetual nor Metrics gives any representation or warranty as to the currency, reliability, completeness or accuracy of the information contained in this website. All opinions and estimates included in this website constitute judgments of Metrics as at the date of website creation and are subject to change without notice. Past performance is not a reliable indicator of future performance.

Cororate Governance
Personal Trading in Non-Perpetual Securities | RE Services Personal Trading in Non-Perpetual Securities | Unitholders Communications Policy | Continuous Disclosure Policy

The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned May/2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

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