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Montgomery Investment Management, through its recent partnership with Aura Group, now offers a second strategy for income-seeking retail clients

In May 2022, Montgomery Investment Management (Montgomery) announced its Distribution Partnership with Aura Group and offered wholesale clients access to the Aura High Yield SME Fund. Montgomery will now offer its retail clients access to the Aura Core Income Fund

The Aura High Yield SME Fund has generated reliable and strong risk-adjusted returns distributed as monthly income for 60 months to August 2022 from a well-diversified portfolio of small and medium enterprise (SME) loans. Launched in August 2017, the Aura High Yield SME Fund delivered a compound annual return of 9.64 per cent after expenses and assuming distribution reinvestment, to 30 June 2022.

The objectives of the Aura Core Income Fund are to preserve capital and provide stable monthly income and portfolio diversification through exposure to a pool of Australian private debt assets predominantly made up of SME loans.

The retail Aura Core Income Fund aims to achieve a target return of the Reserve Bank of Australia (RBA) Cash Rate plus 3.5%–5.5% per annum net of fees and costs. Currently, the RBA Cash Rate is 2.60%, giving the Fund a current target return of 6.10%-8.10%[1]The first units in the Fund are intended to be issued on 4 October 2022, and the performance will be available to report in November 2022.

The Fund is an Australian registered managed investment scheme. It is open-ended, with a minimum investment of $25,000, and additional investments of $5,000 can be made. The Fund is priced monthly and offers monthly applications. Due to the Fund’s investment strategy, the Fund is defined as illiquid by the Corporations Act 2001 and there may be periods where an investment in the Fund cannot be redeemed. Redemption requests can only be submitted in response to Withdrawal Offers made by the Responsible Entity. Refer to Section 7 of the PDS for further information. Investors can receive monthly cash distributions or opt into the distribution reinvestment plan. The annual management fees and costs are 0.69%.

For retail investors, Credit Income Funds can offer attractive income yields paid monthly. Traditional lenders (e.g., banks) have focused their lending operations on large business customers, seeking to profit from scale. Consequently, SMEs have been searching for alternative sources of credit. This combination of low cash yields and an absence of lending to SMEs by banks, provides investors with a unique opportunity to provide funding.

Roger Montgomery, Chairman of Montgomery Investment Management, said, “The success of the Aura High Yield SME Fund has seen rising demand from clients for access to this type of investment strategy. I am delighted to now offer a high-quality income solution for our retail clients in partnership with Aura Credit Holdings and working with Brett Craig, the Portfolio Manager. By lending to small and medium enterprises through loan originators, Brett's focus on income has produced an enviable track record for its wholesale Fund. Aura Group has subsequently created this new income fund for retail clients.”

Brett Craig is the Portfolio Manager and a Director of Aura Credit Holdings Pty Ltd. He and his analysts are supported by an Investment Committee comprising Calvin Ng, co-founder and Managing Director of Aura Group, and Allan Savins, the Chief Executive Officer of BNK Banking Corporation Limited.

Before joining Aura Group in 2016, Brett spent 11 years in Macquarie Bank’s debt markets business, where he originated, structured and distributed debt products. Brett is an industry pioneer, as he was the first to originate, structure, negotiate, and subsequently execute a bank debt facility for an Australian alternative finance lender.

To learn more about the Aura Core Income Fund, please visit our Fund web page.

[1] The Target Net Return is not guaranteed. The target estimate is not guaranteed and depends on the official RBA cash rate during the year.


IMPORTANT INFORMATION

This information is provided by Montgomery Investment Management Pty Ltd (ACN 139 161 701 | AFSL 354564) (Montgomery) as authorised distributor of the Aura Core Income Fund (ARSN 658 462 652) (Fund). As authorised distributor, Montgomery is entitled to earn distribution fees paid by the investment manager and, subject to certain conditions being met, may be issued equity in the investment manager or entities associated with the investment manager.

The Aura Core Income Fund (ARSN 658 462 652)(Fund) is issued by One Managed Investment Funds Limited (ACN 117 400 987 | AFSL 297042) (OMIFL) as responsible entity for the Fund. Aura Credit Holdings Pty Ltd (ACN 656 261 200) (ACH) is the investment manager of the Fund and operates as a Corporate Authorised Representative (CAR 1297296) of Aura Capital Pty Ltd (ACN 143 700 887 | AFSL 366230).  

The Aura High Yield SME Fund is an unregistered managed investment scheme for wholesale clients only and is issued under an Information Memorandum by Aura Funds Management Pty Ltd (ABN 96 607 158 814, Authorised Representative No. 1233893 of Aura Capital Pty Ltd AFSL No. 366 230, ABN 48 143 700 887).

Any financial product advice given is of a general nature only. The information has been provided without taking into account the investment objectives, financial situation or needs of any particular investor. Therefore, before acting on the information contained in this report you should seek professional advice and consider whether the information is appropriate in light of your objectives, financial situation and needs.  

You should obtain and carefully consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the Aura Core Income Fund before making any decision about whether to acquire or continue to hold an interest in the Fund. Applications for units in the Fund can only be made through a valid paper or online application form accompanying the PDS. The PDS, TMD, continuous disclosure notices and relevant application form may be obtained from www.oneinvestment.com.au/auracoreincomefund or from Montgomery.

Montgomery, ACH and OMIFL do not guarantee the performance of the Fund, the repayment of any capital or any rate of return. Investing in any financial product is subject to investment risk including possible loss. Past performance is not a reliable indicator of future performance. Information in this report may be based on information provided by third parties that may not have been verified.

Where information provided by Brett Craig, Portfolio Manager of the Fund, consists of General Advice, this is provided as an Authorised Representative (AR No. 001298683) of Montgomery.

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