The Bentham ABS Fund joins Bentham’s Professional Global Income Fund, Professional Syndicated Loan Fund and High Yield Fund, which were made available via the ASX mFund service in 2014 and 2015.
Bentham Asset Management CIO and principal, Richard Quin, said the ABS fund was created to provide investors with access to a global floating-rate income strategy which targeted real returns over cash with a low amount of default risk.
As at 30 November 2018, the Bentham Asset Backed Securities Fund had returned 4.31 per cent p.a. (net of fees) over the last two years since its inception in October 2016.
“We saw a need in the Australian market for a conservative monthly income fund which can provide real yield above cash or term deposits while focusing on highly-rated global investments, typically single-A, double-A and triple-A,” Mr Quin said.
“Many of our clients were disappointed with the yield on traditional domestic investment grade fixed income funds and were concerned about the amount of interest rate risk and corporate bond exposure.”
The CIO said that ABS, as an asset class, can provide a conservative credit investment with capital stability and regular income. He added that, generally speaking, ABS was an unfairly maligned asset class, with the reputation of the broad ABS market suffering due to the underperformance of some very specific sub-sectors.
“In many ways, the 2008 global financial crisis (GFC) has set the foundations for what we see as an attractive opportunity for investors now – there have been improvements to origination and rating processes, and regulatory reforms,” Mr Quin said.
“As a consequence of the GFC, the security structures of most classes of ABS have become materially more robust. Pricing dynamics in global ABS markets have also shifted in favour of investors post crises. Tighter capital requirements for banks and changes in the investor base have increased target investor credit spreads, leaving the asset class offering attractive absolute and relative credit risk premium in our assessment.”
