Asset backed securities (ABS)

Our diversified private debt investment grade solutions invest in cash flow generating long-dated illiquid assets that aim to provide a source of reliable income for our investor-clients. These are multi-asset private debt strategies targeting return over government bonds or a premium to public fixed income based on clients’ individual credit risk profiles. They carry both fixed rate and inflation linked assets, with cashflow matching characteristics.

These are diversified portfolios built from a wide range of sectors: private placements, infrastructure debt, long lease property, income strips and social housing.

Diversified private debt investment grade funds also help clients to address their ESG and sustainability objectives because of their ability to provide investment into the UK economy, supporting long-term infrastructure and real assets such as social housing.

ESG criteria is inherent within this portfolio. Portfolio companies display strong governance scores for all assets, as expected for investment grade buy and hold.  They also display strong governance scores for all assets, as expected for investment grade buy and hold. These portfolios benefit from environmental representation from assets offering positive environmental solutions, for example within solar or wind power. 

Our diversified non-investment grade private debt solutions aim to provide greater liquidity options compared with alternative private asset allocations. These investments are both diverse and income-generating. The underlying assets are held to maturity and have the potential to generate attractive risk-adjusted returns. They also offer exposure to a diverse range of underlying assets.

Our diversified private debt non-investment grade portfolio is split across three main channels:

Having invested in a broad variety of private asset classes for our internal asset owner since 1997, we started building multi-asset private debt portfolios in 2012. 

Our experienced investment teams have a proven track record of combining disparate assets and creating coherent portfolios to meet client needs. Our flexible and repeatable approach has been refined and adapted over the last decade to meet a broad range of approximately 100 predominantly UK client portfolios. 

Our assets are screened via our private debt impact process. Our approach to impact investing is aligned with the impact criteria based on the IMP Five Dimensions of Impact framework. This approach takes into account performance objectives, intentionality, additionality, avoiding harm and monitoring/reporting of impact KPIs.

These are assets which aim to make a measurable, positive contribution to the environment or society. Private debt involves lending to smaller companies that are more likely to be focused in a narrower range of business activities than public markets, which also contributes to the greater number of pure-play impact investment opportunities in private markets and increases the ability to measure and determine their positive contribution.

Given the increasing focus on investment into sectors poised to benefit from the transition to a low carbon future, we believe that this will be an important area of long-term value creation.

We integrate ESG criteria throughout our investment process. ESG scorecards are created for all assets at the point of investment and are integrated into the credit rating. This is discussed at the credit committee which intrinsically makes impact part of the investment process, and which assesses value as a function of risk.

We choose to engage rather than disinvest using the UNPRI definition of engagement which can be either thematic or specific. Our selected thematics are led by the stewardship team and will focus on 2-3 investment themes. Our thematic impact strategies seek to provide attractive sources of income for investors and a measurable positive social and / or environmental impact. 

Our strategies encompass a broad range of private and illiquid assets that offer an illiquidity premium over equivalently rated public bonds. The impact of these assets is assessed using the IMP Impact framework in addition to the annual impact report, outlining the environmental and social impact of the fund’s investments.