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AURA HIGH YIELD SME FUND CONFIRMED AS 'VERY STRONG'

Melbourne, 27 February 2020 – Rating of Aura High Yield SME Fund confirmed as VERY STRONG

Australia Ratings Analytics (Australia Ratings) has reviewed its investment rating of the Aura High Yield SME Fund (the Fund) and confirmed its rating of VERY STRONG.

A rating of VERY STRONG is the second highest rating on the investment rating scale used by Australia Rating. A VERY STRONG investment rating indicates a very strong conviction that the fund can deliver a risk adjusted return in line with the fund’s investment objective. 

The Aura High Yield SME Fund is managed by Aura Funds Management Limited and invests in non-bank lenders specialising in providing finance to small and medium (SME) businesses in Australia. The Fund obtains this exposure through structured notes that are backed by secured and unsecured loans to SMEs that provide an attractive risk-adjusted return.

Australia Ratings’ analyst Maggie Callinan said “The manager of the AURA High Yield SME Fund has furthered their strategy of adding to platform diversification over the last year. The Investment Team is stable and performance has been maintained through periods of uncertainty in this sector. The Fund has become more diversified, reducing risk and enhancing the risk-return trade-off.” Ms Callinan also noted that “The Fund continues to offer an attractive investment on a risk-return basis that captures the higher interest rate premium of SME loans without the substantial cost overhead typical of a bank lender.”

The Aura High Yield SME Funds’ Portfolio Manager, Brett Craig, said “We are very happy that our Very Strong rating has been maintained for 2020. This is a validation of our robust management process to deliver strong risk-adjusted returns to our investors. Through continued diversification of the underlying loan assets, we aim to continue our strong performance in volatile markets.”

The Fund offers monthly income, targeting returns at 10-12% p.a. (net of management fees) with low level of capital loss from diversified pools of loans in each tranche of its investments.

Australia Ratings has also assigned its Product Complexity Indicator of ‘YELLOW’ indicating the fund as a Complex financial product. Aura’s key capability, which is complex given the underlying due diligence and monitoring required, is the ability to identify and validate superior loan underwriting and servicing standards of non-bank lenders with experience in the SME sector.

The research report is available from www.australiaratings.com.

FOR MORE INFORMATION, CONTACT:

Maggie Callinan, Director
maggie.callinan@australiaratings.com 03 8080 6684

ABOUT AUSTRALIA RATINGS

Australia Ratings is a local, independent rating agency that provides research and ratings on debt securities, investment products, and Operational Capability Assessments. As an ASIC-licensed rating agency, we provide general advice to the broader investment community through our detailed reports. We are Australia’s only agency that holds a retail Australian Financial Services Licence (AFSL). This enables both retail and wholesale investors to use our credit ratings to help them gauge credit risk and complexity of financial products sold in the Australian market.

About Australia Ratings’ Investment Rating

Our investment rating reflects Australia Ratings’ current opinion of a fund’s or an investment’s ability to achieve its stated investment objectives in the near term.The rating expresses a view on the expected consistency of the fund’s or investment’s performance within its peer or style group and on the fund manager’s ability to produce superior performance amongst its peers in the near term with due regard to the medium-term consensus view of the asset class to which the product is benchmarked.

A five-point scale is used to differentiate our opinion on how well we believe a fund will perform against a range of risks. Click here to find out more.

 


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