With interest rates hovering at low levels and bond yields compressed, investors need to think outside the box in their search for returns. Private secured direct lending and securitised credit strategies can provide an alternative source of income as well as capital growth.
Securitisation involves bundling the cash flows from various loans, such as mortgages, car loans and credit card payments, into bonds known as asset-backed securities. A portfolio allocation to private and public loans can help investors achieve their desired risk-return profile while addressing liquidity needs, if required.
Schroders secured direct lending and securitised credit strategies seek to generate income and capital growth throughout the credit cycle with a research-oriented, value-driven approach to investing1. Our direct lending targets middle markets in the US that are underserved by traditional lenders due to tighter regulations. The largest securitisation sectors are mortgage-backed securities and asset-backed securities.
By investing in securitised credit, investors gain access to an alternative asset class that offers exposure to consumer, commercial and corporate loans, as well as other forms of credit not available on public markets.
1There is no guarantee that objectives will be met.