TOL - 29th Mar, 2023
Private debt is made for today's market, and now it's available to retail investors
In times of economic downturn, the pendulum tends to swing in the favour of lenders, argues Metrics Credit Partners' Andrew Lockhart.
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.
Topics discussed:
- 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 interview was filmed on Tuesday March 14, 2023.
FUND INFORMATION
Name: 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.
LIT
Metrics Income Opportunities Trust
Australian Fixed Income
View
Name: 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.
LIT
Metrics Master Income Trust
Australian Fixed Income
View
Learn more
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.
Disclaimer
This content contains general information only. It does not take into account your investment objectives, particular needs or financial situation and shouldn’t be considered as financial advice. Always consult a licensed and trustworthy professional before making a financial, taxation or legal decision.
The Trust Company (RE Services) Limited (ABN 45 003 278 831, AFSL 235 150) is the Responsible Entity of the Metrics Master Income Trust and Metrics Income Opportunities Trust (the Trusts). Equity Trustees Limited (CAN 004 031 298, AFSL 240 975) is the Responsible Entity of the Metrics Direct Income Fund (Fund). For further information on the Trusts and Fund, please refer to the relevant PDS and Target Market Determination available at metrics.com.au.
Total returns mentioned for the Metrics Master Income Trust (ASX: MXT) and Metrics Income Opportunities Trust (ASX: MOT) have been calculated using exit prices after taking into account all of Perpetual’s ongoing fees and assuming reinvestment of distributions. No allowance has been made for taxation. Past performance is not indicative of future performance.
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David is a content editor at Livewire Markets. He currently hosts The Rules of Investing, a half hour podcast where he sits down with leading experts across equities, fixed income and macro.
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Livewire gives readers access to information and educational content provided by financial services professionals and companies ("Livewire Contributors"). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.
2 stocks mentioned
2 funds mentioned
2 contributors mentioned
David is a content editor at Livewire Markets. He currently hosts The Rules of Investing, a half hour podcast where he sits down with leading experts across equities, fixed income and macro.
Expertise
David is a content editor at Livewire Markets. He currently hosts The Rules of Investing, a half hour podcast where he sits down with leading experts across equities, fixed income and macro.
Expertise
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