Melbourne, 12 March 2019 – Rating of Aura High Yield SME Fund upgraded to
Australia Ratings Analytics (Australia Ratings) has upgraded its investment rating of the Aura High Yield SME Fund (the Fund) to VERY STRONG from 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 upgrade of the rating reflects increased confidence in the ability of the Manager to identify robust non-bank lending platforms to gain exposure to the SME sector”. She added “the upgrade also reflects an increasing degree of diversification in the fund as it now finances two SME lending platforms”. 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 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. As at March 2019, the Fund had $18.5 million assets under management.
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 relatively new upsurge in this sector, is the ability to identify and validate superior loan underwriting and servicing standards of non-bank lenders with experience in the SME sector.
A full rating report is available from www.australiaratings.com
FOR MORE INFORMATION CONTACT:
Maggie Callinan, Director
03 8080 6684
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.
About the Product Complexity Indicator
Our proprietary colour-coded product complexity indicator (PCI) highlights the complexity level of an investment by its terms and conditions’ structure and transparency that may affect an investor’s return.