By guest contributor Andrew Lockhart, Managing Partner, Metrics Credit Partners
There are few choices for SMSF investors wanting to diversify their fixed interest allocation as fixed interest investment is largely restricted to government bonds, semi-government bonds or bank term deposits, with virtually no access to corporate bonds.
Less risky alternatives to equities that still offer attractive returns are difficult to access. This has resulted in an over allocation to cash and hybrid securities, particularly for SMSFs and retirees.
Australian domestic super fund investors and self-managed super funds are overweight in equities, and cash. They have no means to access asset classes that offer lower risk than equities but with higher returns than cash without the durational risk associated with traditional fixed interest.
Metrics Credit Partners aims to change that. We’re no strangers to fighting for the small player, having made our mark in the corporate loan sector, an area dominated by the big banks. A good example of this is the launch of our MCP Master Income Trust (ASX: MXT), which allows investors to invest in corporate loans – an asset class dominated by regulated banks.
The Trust’s 2017 IPO (initial public offering), worth in excess of $500 million, was one of the largest on the ASX last year. Strong participation in the capital raising saw it fully subscribed in a matter of weeks. Set up to lend funds to corporate borrowers across a wide range of industries and transaction types, including infrastructure, property development and corporate acquisitions, MXT offers an alternative to investors seeking lower risk than equities but with attractive returns. The roughly 8,000 investors in MXT also come from diverse backgrounds, and include SMSFs, retirees, retail clients and high net worth individuals.