By investing in credit, you can at once address rising risks of persistent inflation or falling interest rates. The Defender Credit Fund allows you to invest in a diversified portfolio of secured SMEs and mid-market companies while providing investors with regular monthly income distributions. However, like other funds, there are key reasons why you should invest in the Defender Credit Fund, especially for investors who are seeking stable returns.
Fund Investment Strategy Focus is Credit
The investment strategy of the Defender Credit Fund focuses on providing loans exclusively to small and medium-sized enterprises (SMEs) and mid-market companies in Australia, targeting those with appropriate collateral pools. It has been established to fill a lending gap left by major banks, the Fund focuses on capitalizing on strong risk-adjusted return opportunities within the alternative loan market. The portfolio primarily consists of diversified senior secured loans, with allocations of up to 100% in such loans and up to 15% in special situations or subordinated loans. This strategy aims to preserve capital and ensure that investors have access to a regular income. It is ideal to invest in to generate stable and consistent returns at a time when the trajectory of interest rates is headed downwards and investors are preparing to search for yield elsewhere.
Fund Performance
While other funds have their preferred strategy, the Defender Credit Fund fund prefers to implement a momentum-based strategy, observed through metrics. If you look at the fund’s performance over the last 12 months, the fund has seen a return of 10.5% and a 3-year annualized return of 9.2% as of July 2024. These figures indicate that the Fund’s momentum strategy has successfully captured upward trends in the SME lending market, contributing to its overall performance
Clarity on Key Investments
The momentum-based approach significantly enhances the performance of the Defender Credit Fund by enabling it to identify and capitalize on prevailing trends in the SME lending market. Through systematic trend analysis, tactical allocation, and effective risk management, the Fund aims to deliver strong returns while providing income to investors. As the Fund continues to leverage this strategy, it positions itself as a compelling option for those seeking exposure to the alternative lending market in Australia.
Previous research finds that momentum investing is effective and shows that assets that perform well in the short run also perform well over the long run. For example, studies by Jegadeesh and Titman (1993) show that stocks that exhibit high performance over a specific period could maintain their upward trajectory. This is why the Defender Credit Fund applies it to its investment strategies. The empirical evidence provided by findings from researchers is a solid foundation on which to base the fund’s investment decisions.
Addressing Market Conditions
The Defender Credit Fund addresses market conditions by strategically targeting the underserved SME lending sector in Australia, which has been largely neglected by the major banks. By focusing on loans to SMEs and mid-market companies with solid collateral, the Fund capitalizes on strong risk-adjusted return opportunities. Its proprietary momentum-based approach allows the Fund to identify and invest in loans that exhibit positive performance trends, enhancing overall returns. Additionally, the Fund employs active risk management techniques to mitigate potential downturns, ensuring stability and consistent income generation through monthly distributions. This dual focus on growth and risk management positions the Fund favorably in fluctuating market environments.
Transparency and Disclaimers
The Defender Credit Fund maintains a high level of transparency by providing detailed information about its investment strategy, portfolio composition, and performance. The fund’s website includes a dedicated section for disclaimers, clearly outlining the risks associated with investing in the fund. These disclaimers cover key points such as the potential for loss of principal, the illiquid nature of the investment, and the limited liquidity options available to investors. The fund also emphasizes that its past performance does not guarantee future results. By being upfront about the risks and limitations, the Defender Credit Fund demonstrates a commitment to transparency and helps investors make informed decisions.
The Defender Credit Fund provides a strategic investment opportunity for those looking to tap into the underserved SME lending market in Australia. With a focus on diversification, experienced management, and proactive risk mitigation, the Fund is designed to generate steady returns while ensuring consistent income for investors. The momentum-based strategy further strengthens its ability to capture upward trends, offering a proven approach for those seeking stability and growth in alternative lending.
