Interest rate protection and yield
Most secured assets are floating rate instruments and can help protect against the tighter monetary policy brought about by resurgent inflation.
Secured assets can also offer higher expected risk-adjusted yield than a traditional investment grade credit allocation. This is partly due to their illiquidity premium, but also due to changes in bank regulations which has meant that many borrowers have turned to private markets for their financing needs.
In addition to increased risk-adjusted yield, secured assets can also offer investors:
An additional tool to help generate stable and predictable cashflows.
Structural protection as they are backed by physical assets or a pool of assets, offering a level of protection to investors unavailable in the unsecured, traditional credit space.
Diversification within a fixed income portfolio and a broader pool of growth-seeking assets.
Lower mark-to-market volatility, enabling long-term strategic allocations.
AUM of alternative credit.
Distinct top-down investment process capturing macro down to asset specific opportunities.
track record of investing across the full spectrum of liquid and illiquid strategies.
Source: AXA IM Alts. Data as at 31/12/2022.
Dispersion in markets will continue to play a key role in providing diversified returns for clients.
Our solutions for institutional investors
Integrating the cashflow and yield generating characteristics of secured assets into portfolios can present real challenges, even for the most sophisticated investors. Working with clients and advisors we build compelling pooled and customised solutions with targeted outcomes, to help navigate the complexities of implementation.
We are a leading global player in alternative credit, with more than 20 years of experience across the full spectrum of liquid and illiquid strategies.
The full scope of debt instruments
As well as offering a potential yield premium versus traditional credit, secured finance can provide diversification benefits by investing in the full scope of debt instruments, secured by different types of collateral, in both the public and private markets.
General risk factors of investing in a global portfolio of secured assets debt include currency risk, credit risk and liquidity risk. Investment in secured assets should normally be on a long-term buy and hold basis. Other risk considerations for long-term investors include but are not limited to:
- General economic and market conditions
- Market risk
- Performance risk
- Model risk
- Concentration risk
The value of investments may fall as well as rise and you may not get back the full amount invested.