JPMorgan AM launches fund for US secured loans
JPMorgan Asset Management will proceed with the launch of a closed-ended fund investing mainly in US senior secured loans, following successful test marketing at the end of September.
Simon Crinage, head of Investment Trusts, said: “What we found in our meetings with potential investors is that there is overwhelming support for another quality name in the loans space, and we believe we can raise significant assets for such a strategy. The senior members of the team that will run our new fund have been managing high-yield bond and loan portfolios together for more than 25 years, and assets under management in these portfolios stood at US$35.9 billion as of 31 July 2013.”
The new fund will be the second closed-ended fund launch this year from the firm. In June £136m was raised for the JPMorgan Global Convertibles Income Fund, underscoring the strong demand in the marketplace for asset classes that can deliver strong current rates of income, JPMorgan also said.
The placing and offer period for the new fund is expected to open in November, with the shares anticipated to be admitted to trading on the London Stock Exchange in early December. Panmure Gordon will act as broker to the launch.
Charlie Murphy, Head of Investment Funds Research at Panmure Gordon, explained: “J.P. Morgan has a superb long-term track record and reputation in the senior loans market. This new fund will be differentiated from the existing London-listed senior loans funds with the portfolio focused on the deep and liquid US leveraged loans market.”
The new senior loans fund will target an initial dividend yield of 5% on the issue price of £1.00 per share. It will have the ability tactically to gear its portfolio modestly to make investments. The portfolio will be largely focused on US assets, and will be hedged to sterling to suit the needs of mainly UK-based investors. JPMAM is seeking to raise at least £100m at launch.
Portfolio manager Jim Shanahan commented: “Investors have been actively seeking investments that offer the combination of reasonable yield and little interest rate duration. Globally we are seeing increased demand for this type of asset, which is difficult for UK investors to access other than in a listed vehicle.
“Loans offer appealing yield alternatives relative to traditional fixed income instruments, including treasuries and investment grade corporate bonds. Senior loans are a mature and diverse asset class, often issued by below investment grade companies in all kinds of industries, including technology, casinos, restaurants, autos, health, retail, paper, utilities, mining and steel.”