M&G launches ABS fund with daily liquidity
M&G has launched an asset-backed securities (ABS) fund that offers daily liquidity to investors.
Launching with €200m (£168m) of external client capital from pension schemes and family offices, the M&G Investment Grade ABS Fund will seek opportunities across global securitised markets, investing in instruments backed by assets such as residential mortgages, consumer, corporate and automotive loans.
The asset management firm said the fund would follow the same long-term, value-based investment philosophy as M&G’s £3.5bn of existing investment grade ABS strategies.
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“The investment case for the asset class is compelling for its exposure to granular and defensive underlying assets, low correlation with other asset classes and attractive value compared to corporate and government bonds,” said M&G head of investment grade structured credit Matthew Wardle.
“ABS performance has remained robust during recent years against a backdrop of higher interest rates, increased inflation and costs pressures for consumers and corporates alike. Falling inflation, expectations of continued low unemployment and healthy wage growth can continue to support a strong fundamental track record for the asset class looking forward.”
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Global head of product and distribution Neal Brooks added: “We continue to see demand from institutional investors who use ABS as an alternative to other areas of fixed income for its strong risk-adjusted yield pick-up – many of whom have a growing appetite for daily liquidity – a feature that is also resonating with our wholesale client base.
“This fund is a helpful entry point for wholesale investors who may have previously overlooked ABS because of the perceived complexity and risk but are attracted to its high credit resiliency and attractive value. Offering daily liquidity and launching with €200m of invested capital, it caters to a wide investor base, providing a well-diversified and seasoned portfolio from day one with liquidity ready to be deployed in what is expected to be a continued busy period for investment grade ABS issuance.”
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