Boutique investment manager and non-bank lender Zagga has announced the launch of its inaugural unitised private debt fund, the Zagga CRED Fund (ZCF).
ZCF, which targets wholesale investors with a minimum $50,000 investment, invests in Zagga’s portfolio of credit-vetted, mortgage-secured commercial real estate debt (CRED) loans, with stable, fixed-income style returns.
According to the firm, given the asset class’ ability to serve as a robust hedge against rising interest rates, the fund presents as a compelling alternative for advisers aiming to increase their clients’ allocation to private debt in the current inflationary climate.
Moreover, Zagga underlined that the fund represents a “pivotal” addition to its suite of offerings, straying from traditional channels to cater to investors seeking “stable and determinable income-generating, capital preservation and portfolio diversification opportunities”.
Commenting on the launch, Zagga chief executive Alan Greenstein said: “Since our inaugural loan investment in 2017, we have convincingly demonstrated to our investors the value of incorporating CRED investments into their portfolios.”
Mr Greenstein emphasised the increasing popularity of the CRED sector – both for investors seeking returns and borrowers seeking an alternative funding source to traditional banks.
“These investments represent an alternative, non-correlated option – a middle ground, so to speak – to conventional equity markets. They can be a solid hedge against inflation,” he added.
“They deliver determinable, consistent cash returns that surpass, sometimes materially, the interest rates offered by traditional bank deposits, without a commensurate increase in risk.”
In a recent white paper issued by Zagga, the group highlighted that CRED stands out as an increasingly favoured avenue for providing investors with opportunities to capitalise on its non-correlated risk and return profile.
“The introduction of the Zagga unitised fund underscores the growing appetite among financial advisers and wholesale investors for fixed-income investment alternatives,” the firm said in a statement on Friday.
In December 2022, Zagga surpassed $1 billion in originations, marking a growth rate of over 40 per cent compared against the previous year.