An alternative asset class for savvy wholesale income investors

Across a series of recent wires on Livewire, Brett Craig of Aura Group explained the emergence of SME debt capital as an asset class and its potential attractiveness for income investors seeking stable cashflow.

SMEs have long been neglected by banks due to the complexity and length of credit assessment, giving way to SME Alternative Finance (AltFi) lenders. These fintech non-banks can quickly provide loans to match the duration of businesses’ funding needs. With SMEs facing a ~$90 billion funding gap (1), Brett and the team at Aura Group use a disciplined and rigorous strategy to fund quality AltFi lenders, who then finance SMEs.

Even in the midst of COVID-19, credit quality has held up due to prudent management across the lending portfolio overseen by Aura Group, and monthly income with approximately 10% target returns have kept flowing to investors of the Aura High Yield SME Fund. To find out more about investing with Aura Group, click below.

Aura High Yield SME Fund - Open for investment

The Aura High Yield SME Fund aims to provide stable monthly income from a diversified portfolio of debt securities, principally issued by lenders to SME businesses in Australia.
Find out more here

A step-by-step guide on understanding SME debt capital

• In this wire, Brett explains the factors creating friction between SME borrowers and banks
• In the first of three videos, he introduces SME debt capital as an asset class and the opportunity on hand to generate income.
• In the second video, Brett explains how his process has adapted to the changing environment, what government stimulus has meant for SMEs and what to expect when measures like JobKeeper are wound back.

Footnotes:

1. Reserve Bank of Australia, 19 March 2020

Past performance is not an indicator of future performance. Distributions are not guaranteed and are subject to Fund Performance and/or discretion of the Manager. This report is provided to you for information purposes only by Aura Funds Management Pty Ltd (Aura) (ABN 96 607 158 814, Authorised Representative 1233893 of Aura Capital Pty Ltd AFSL 366 230, ABN 48143700887).