Last year, we launched La Trobe Global Asset Management as a new product series designed to bring the best of the investment world to Australian investors. We are targeting the delivery of quality products which are unique, or have traditionally been hard-to-access for Australian retail investors.
Of course, our c.100,000 investors^ know La Trobe Financial for our existing range of products, which aim to deliver income at all points along the economic cycle. These products have been created with quality assets, transparent and easy to understand structures, and are managed by a team with real experience in the asset class.
This simple premise works, and we are continuing this with the launch of the La Trobe US Private Credit Fund.
Introducing The La Trobe US Private Credit Fund
We are pleased to launch the La Trobe US Private Credit Fund Class B Units – now available for retail investors.
Our La Trobe US Private Credit Fund provides Australian investors with the opportunity to participate in a generational investment thematic: supporting the rebuild of the U.S. middle market through a defensive portfolio of directly originated, senior secured loans provided to U.S. middle market companies.
Already the world’s third largest economy and forming the backbone of the American economy, the U.S. middle market will be buttressed by the billions of dollars in public expenditure pledged through the Inflation Reduction Act, and the support of both major political parties to re-shore manufacturing and jobs to America.
The product offers investors monthly income with a target distribution return of 8.50%* per annum net of fees and expenses and before adjustments for FX rate fluctuations, quarterly liquidity access+, with a minimum investment amount of $10,000.
The product invests into assets selected and managed by Morgan Stanley’s direct lending team in the U.S.
In the following section, we unpick key elements of the product.
The Assets: quality assets in a diversified portfolio
The La Trobe US Private Credit Fund invests indirectly into a diversified portfolio comprised primarily of directly originated, senior secured first-lien loans provided to companies in the US middle market.
These are large companies (average EBITDA of US$199m) operating in very deep and diversified industries within the US middle market. Companies which demonstrate strong and stable free-cash flows, which are led by experienced management teams in businesses with leading market positions and strong barriers to entry. We deliberately avoid lending to companies and sectors that are cyclical in nature. This is important, as we seek to construct a portfolio which delivers performance for investors across the economic and market cycle. As with all investments, an investment in the La Trobe US Private Credit Fund carries risk. Investors should read and understand risks outlined in the Product Disclosure Statement prior to making an investment, or consider consulting a financial adviser.
With those specific requirements for context, Morgan Stanley – our product partner for this strategy – are highly selective in the loans they approve for our investment portfolio, rejecting 95% of the 1,000+ loans they originate each year.
The portfolio is, by its nature, conservative and comprised of loans which are primarily first lien, with an average loan-to-value ratio of 42%. This is the equivalent to the first mortgage positions we hold within our existing strategies. This means our borrowers have to pay us first, and to the extent there is any non-performance, our capital gets paid back first too.
The Structure: Performance without the Complexity
The La Trobe US Private Credit Fund is an Australian unit trust, registered as a managed investment scheme. We accept investments into our product monthly in Australian Dollars, with investments into the U.S. Middle Market loan assets (held by the discrete to La Trobe Financial Business Development Company) – made in U.S. Dollars – hedged to reduce the impact of foreign currency movements to capital invested in Australian Dollars.
The income generated by the underlying portfolio of loans is confirmed and paid to investors monthly. Practically, funds are paid to us in U.S. Dollars, which we convert back to Australian Dollars and pay to investors. We are targeting for retail investors an annualised distribution return of 8.50%* net of fees and expenses, and prior to any movements in FX.
We provide quarterly liquidity access,+ on this product, making available up to 5% of the assets of your investment class (Class A: wholesale; Class B: retail) each quarter.
And for those of you who have invested into U.S. assets in the past, don’t worry. The structure of the investment fund is designed to insulate you from having to complete lengthy U.S. compliance and tax reporting requirements.
The Manager: Highly Experienced & Best in Class
Investors are familiar with La Trobe Financial’s seven decades of managing private credit portfolios. We are combining this strength and experience with the private credit capabilities of Morgan Stanley’s U.S. team to deliver the right assets, the right structure and the right manager. A powerful combination for today’s investor.
Investing into the La Trobe US Private Credit Fund is straight foward. A copy of the Product Disclosure Statement and Target Market Determination (link both) can be accessed here [link], and our friendly team are available on 1800 818 818. For more information, please click through to our US Private Credit product page as follows.
+This target yield is not a forecast, projection or prediction of the performance of the Fund. The Fund’s target yield is not and should not be seen as a statement about the Fund’s likely future performance and there is no guarantee that the performance of the Fund will achieve the target yield. The target distribution return is net of fees and costs but excludes any adjustments for FX rate fluctuations. The target return is reviewed monthly and may change. This is a target return only and may not be achieved.
*The target distribution return is net of fees and expenses but excludes any adjustments for FX rate fluctuations. The target return is reviewed monthly and may change. This target return is determined with reference to the return benchmark of the Secured Overnight Financing Rate (SOFR) + 3% as at 30 May 2024. This is a target return only and may not be achieved.
# Redemption requests are generally processed on a quarterly basis in accordance with the PDS. Investors do not have a right to redeem and the Responsible Entity (RE) may reject redemption requests. The ability to redeem is subject to liquidity and the processing of redemptions may be delayed or suspended in certain circumstances. The RE will limit redemptions to up to 5% of the issued Class B Units each quarter. Redemption requests exceeding that limit may be accepted by the RE, pro-rated or scaled back to 5%. Please refer to the PDS for more details about redeeming Class B Units and how to submit a redemption request form.
^Total investors is calculated by adding all individual & joint investors (which includes some investors with a current zero balance in their account) to reasonable estimates of investors investing via platform, trusts or SMSFs.
La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe US Private Credit Fund ARSN 677 174 382. It is important that you consider the Product Disclosure Statement (PDS) when deciding whether to invest or continue to invest in the fund. The PDS and Target Market Determination are available on our website.
Past performance is not a reliable indicator of future performance.
To the extent that any statement in this email constitutes financial product advice, that advice is general advice only and has been prepared without considering your objectives, financial situation or needs.
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