The Fund offers Australian investors access to a higher income strategy with a focus on capital preservation and additional diversification from traditional investments in their portfolios
Ares Australia Management (“AAM”), the strategic joint venture between one of the leading global credit and alternative investment managers Ares Management Corporation (NYSE:ARES) (“Ares”) and Fidante Partners, today launched its first Australian product, the Ares Global Credit Income Fund (the “Fund”).
AAM Head Teiki Benveniste said the Fund had been developed to meet the strong demand from Australian investors for strategies that aim to deliver high levels of income with a focus on capital preservation while lowering concentration risks in their investment portfolios.
“In this volatile, uncertain and low interest rate environment, investors are focused on finding reliable sources of higher income without risking severe capital losses and with better risk diversification than traditional investments in their portfolios. In Australia, a lot of investors looking for higher levels of income have historically invested in Australian bank equity or hybrid securities. Fixed income investments also have significant exposure to banks and structured products backed by local mortgages. The Ares Global Credit Income Fund seeks to meet this need for higher income and diversification in a different way.”
The Fund is an actively-managed dynamic and flexible strategy designed for shifting markets to generate steady income with a focus on capital preservation. Ares has delivered compelling risk-adjusted returns to investors for more than two decades through different cycles, with a demonstrated record of outperforming in times of market dislocation. Ares’ U.S. and London-based senior portfolio managers average more than 20 years of investing experience and have a long history of attractive performance in underwriting and managing credit across the Fund’s investable asset classes: corporate bonds, bank loans and asset backed securities.
The Fund has a target distribution of 3% to 4% per annum paid monthly. Seeking to generate stable income, the Fund expects to invest in a highly diversified portfolio of carefully selected credit issuers.
“Ares Australia Management’s ambition is to become one of Australia’s leading credit and alternative asset managers,” added Mr Benveniste. “With approximately 1,200 employees across the world and US$149 billion1 of assets under management, Ares Management Corporation has a leading and award winning investment platform that originates and manages investments across the full credit spectrum including corporate bonds, bank loans, private direct lending and asset-backed finance, as well as other alternative asset classes such as private equity, real estate and infrastructure. AAM will provide Australian investors access to these investment solutions to meet their investment needs.”
The Ares Global Credit Income Fund is the first of several products that AAM expects to launch in Australia over the next two years.
Looking specifically at the opportunity set in credit, over US$110 billion of Ares’ total AUM of US$149 billion is managed across the full credit spectrum.
David Sachs, Partner in Ares Management Corporation’s Strategy and Relationship Management Group said: “At Ares, a continued focus on capital preservation is paramount, and with local market presence in the United States and Europe, I believe Ares is well-positioned to capitalise on the convergence of the traditional and non-traditional credit markets.
“There is a US$4 trillion opportunity set across the U.S. and European corporate bond, bank loan and alternative credit markets. With our multi-asset framework designed to capture real-time shifts in relative value across asset classes, market dislocations, and idiosyncratic credit opportunities, we focus on assets that offer enhanced income and shorter duration.
“Our time-tested investment process with a focus on capital preservation has also delivered a low historical default rate. In corporate bonds and bank loans, Ares’ strategies have shown resilience in times of stress versus the broader market,” Mr Sachs added.
Challenger Funds Management Chief Executive Nick Hamilton said: “The joint venture with Ares is designed to bring Australian investors access to one of the world’s leading alternative credit managers. With the disruption seen globally from COVID-19, there is no more important time for the depth and skill of Ares who invest across the credit universe, an asset class that will continue to grow in importance for investors in Australia. The disruption across markets today is bringing the Ares investment team opportunities and the launch of the Ares Global Credit Income Fund is ideally timed.”