Private debt has come into its own as an asset class as inflation and rates have risen.
In the case of Metrics Credit Partners, the income is floating rate. So as rates rise, so too should the income investors receive from these investments.
However, private debt has traditionally been an illiquid asset out of reach to retail investors.
In one fell swoop, Metrics has changed that by offering investors exposure through two listed investment trusts (LITs): the Metrics Income Opportunities Trust (ASX: MOT) and the Metrics Master Income Trust (ASX: MXT).
"Most investors can't get access to private market loans," says Andrew Lockhart, Managing Partner at Metrics Credit Partners.
"So we've created a mechanism that's given investors access to the asset class, but also gave them the ability to trade the liquidity. So being able to buy and sell on the ASX meant that you are transforming what effectively is a less liquid asset class into something investors can gain access to in a more liquid format."
MXT is designed to be an alternative to a defensive fixed income allocation, while MOT is designed as an equity market replacement.
In this Q&A, Lockhart explains in depth what these two listed funds have to offer investors, how the return is generated, and the prospects for the asset class in today's market.
0:37 - Why did Metrics decide to list Metrics Income Opportunities Trust (ASX: MOT) and Metrics Master Income Trust (ASX: MXT)?
1:32 – What role can these products play in an investment portfolio?
2:37 – How do these products generate their total target return?
4:04 – What is unique about Metrics investment strategy?
5:03 – How is Metrics navigating the current macro environment?
6:42 – Should investors be concerned about loan defaults given the current market?
8:52 – What are some of the key industries and sectors that Metrics lends to and what kind of returns are you expecting from them?
Note: This article and video was first posted on Livewire Markets and the interview was filmed on Tuesday March 14, 2023.
Metrics Income Opportunities Trust (ASX: MOT)
Asset Class: Private debt
Description: Metrics Income Opportunities Trust seeks to provide investors exposure to a portfolio of private credit investments.
Objective: The Trust seeks to provide monthly cash income, preserve investor capital and manage investment risks, while seeking to provide potential for upside gains through investments in private credit and other assets such as Warrants, Options, Preference Shares and Equity.
Metrics Master Income Trust (ASX: MXT)
Asset Class: Private debt
Description: The trust provides monthly cash income, low risk of capital loss and portfolio diversification by actively managing diversified loan portfolios and participating in Australia’s bank-dominated corporate loan market.
Objective: The trust seeks to implement active strategies designed to balance delivery of the Target Return, while seeking to preserve investor capital. The Trust targets a return of the RBA Cash Rate plus 3.25% per annum net of fees.
Metrics Credit Partners is a leading Australian non-bank corporate lender and alternative asset manager. Metrics provide regular and consistent income to investors through its portfolio of corporate loans. Visit their website for further information.
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