Introducing private credit and the Aura High Yield SME Fund
In this presentation I introduced private credit as an emerging asset class for investors seeking reliable income. The Fund’s rigorous stress-testing and credit analysis of both the non-bank lenders and underlying SME borrowers have led to the Fund’s proven track record of capital preservation even throughout periods of asset price volatility, highlighting the key role private credit can play in an investor’s portfolio.
The Aura High Yield SME Fund provides short-term finance to Australian Small and Medium Enterprises (SMEs) seeking cash-flow to fund their capital generative projects. Through an actively managed portfolio of over 7,800 loans, the Fund offers diversified exposures across various industry sectors, geographies and loan terms with a diverse range of loan security and credit support mechanisms.
With the banks transitioning their commercial lending focus to large corporates, non-bank lenders have emerged and utilised their technological advantages to efficiently fill the funding void for small-scale business loans. The lack of competition in the SME funding space has led to the Aura High Yield SME Fund being able to deliver impressive risk-adjusted returns.
Over the 57 months since its inception in August 2017 to 30 April 2022, the Aura High Yield SME Fund has delivered a compound annual return of 9.72 per cent after all fees and expenses, distributed as monthly income. Since inception, the average distribution payment has been 0.78 per cent per month.