In this video Brett Craig explains the emergence of SME debt capital as an emerging asset class for investors seeking income and returns that have little to no correlation with public markets. Whilst SMEs in Australia continue to make a significant contribution to the economy, they have not been well supported by the banking sector.
Brett Craig spoke with James Marlay from Livewire as part of their 2023 Income Series to share his views on the drivers for this income opportunity, how the current economic environment is impacting various sectors of the economy and where he is seeing opportunities to generate stable income.
Source: ASX 200 (^AXJO) Adjusted Close Historical Data
Source: S&P Global - S&P Australia High Yield Corporate Bond Index Historical Data
*Past performance is not an indication of future performance
Source: Aura High Yield SME Fund Performance Update, July 2022. The Fund’s inception date is August 2017. Past performance is not a reliable indicator of future performance.
|Aura High Yield SME Fund||RBA cash rate plus 5% p.a. (Benchmark)||RBA cash||Out/Under Performance|
|2 years (p.a)||8.79%||7.14%||1.93%||1.65%|
|3 years (p.a)||8.88%||6.50%||1.33%||2.37%|
|5 years (p.a)||9.26%||6.35%||1.18%||2.90%|
|Compounded Annual Return||9.61%||6.41%||1.24%||3.19%|
Note: Performance net of fees and expenses. Returns assume reinvestment of all distributions. Past performance is not an indicator of future performance.
The cumulative return is the total return since inception and assumes reinvestment of all distributions.
1. Inception date: 1 August 2017.
2. The Benchmark is the RBA Cash Rate plus 5% p.a.
Aura Funds Management has distributed the following income since inception:
Aura Funds Management may also notify investors from time to time that investors may participate in an arrangement to re-invest their distributions into new Units of the Fund. There may be periods when net income could be negative, and no distribution is made.
You should read the Information Memorandum (IM) before deciding to acquire units in the product.
Units in the Aura High Yield SME Fund (Fund) are issued by Aura Funds Management Pty Ltd (ABN 96 607 158 814, Authorised Representative No. 1233893 of Aura Capital Pty Ltd (ABN 48 143 700 887, AFSL No. 366 230)) (Aura). Aura is the trustee of the Fund and a subsidiary of Aura Group Pty Ltd.
This information is for wholesale or sophisticated investors only and is provided by Montgomery Investment Management Pty Ltd (ABN 73 139 161 701, AFSL No. 354 564) as the authorised distributor of the Fund.
An investment in the Fund must be through a valid paper or online application form accompanying the Information Memorandum.
The information provided is general in nature and does not take into account your investment objectives, financial situation or particular needs. Before making an investment decision you should read the Information Memorandum and (if appropriate) seek professional advice from a licensed financial advisor to determine whether the investment is suitable for you.
The investment returns or repayment of capital of the Fund are not guaranteed.
The value of an investment may rise or fall and you may risk losing some or all of your capital. Past performance is not a reliable indicator of future performance.
The underlying investment philosophy of Aura Group’s Private Credit division is to drive active strategies that provide strong regular income. The team maintains a focus on capital preservation through counterparty selection, deal structuring, asset security, diversification, and portfolio construction. The investment team comprises of seasoned professionals with skills and experience to deliver opportunities across the risk spectrum, driving risk-adjusted returns for our investors.
Brett Craig is the Portfolio Manager of the Aura High Yield SME Fund and the Aura Core Income Fund and is supported by investment analysts James Chapman and Natalie Kolenda.
Brett Craig leads the daily management of the Fund.
Bachelor of Commerce (B.Com.), Accounting, Chartered Accountant
Brett is responsible for portfolio management and asset origination for the Aura High Yield SME Fund and Aura Core Income Fund.
Prior to joining Aura Group, Brett held a number of roles at Macquarie Group over an 11 year period including Vice President within the Debt Markets business where he focused on originating, structuring and distributing debt products primarily in the Australian market.
Brett is renowned as the first portfolio manager to originate, structure, negotiate and execute an Australian Bank Debt facility for an AltFi lender. Prior to the Debt Markets role Brett ran the financial management of the equity derivatives and loans book for the Metals and Energy Capital business.
Brett holds a Bachelor of Commerce from The University of Wollongong and is also a Chartered Accountant.
After accessing the Information Memorandum and reading in full the investment objectives and risks of investing in the Aura High Yield SME Fund:
Complete the online application form at Olivia 123 and ID verification online (approx. 10 minutes)
Submit the completed application form to the Administrator online
Transfer the funds and an investment confirmation will be issued by the Administrator
Download the fund information pack or if you would prefer to talk it over, call David Buckland or Toby Roberts on 02 8046 5000 to discuss the Aura High Yield SME Fund in more detail.
Our partnership with industry-leading superannuation provider, netwealth, can help.
The Fund has a medium-term (2-5 years) objective suitable for wholesale clients seeking a reliable monthly income solution.
Investment in the Fund can only be made by persons who are wholesale clients as defined in Section 761G and Section 761GA of the Corporations Act. View wholesale client definition
The Fund is offered under an Information Memorandum and is an open-ended unit trust that is not registered with ASIC as a managed investment scheme.
The Fund aims to provide a 9%-12% yield, distributed as a reliable monthly income from a diversified portfolio of online lending businesses that offer small short-term loans to small and medium enterprises.
The portfolio invests across a select group of online lenders that provide small, short-term loans to small and medium enterprises (SMEs) across various industries. The Fund invests in high-quality asset-backed SME loans, director guaranteed SME loans, senior loans to financial technology and alternative finance companies.
The Fund invests in online lenders that satisfy the following criteria:
The Fund will also invest in other forms of debt with underlying exposures to SMEs, including senior debt, asset-backed securities such as notes, and bonds issued by securitisation trusts (including covered bonds) and loans made via peer-to-peer lending platforms.
Please refer to Section 4: Investment Plan on page 12 of the IM for further information on the Fund's investment plan.
The minimum investment and minimum wholesale client balance are $100,000.
You may also add to your initial investment through a lump sum additional investment. Additional investments are accepted every month and will be processed on the first business day of each month (provided an application is made before 5 pm on the last business day of the preceding month and the application monies are received by the issue date.)
The Fund’s net asset value is determined on the last business day of the preceding month before processing an application.
Since its inception, the Fund has paid a monthly distribution every month. View distribution history. It is intended that the Fund will continue to make monthly income distributions to investors.
Yes, you can elect to take distributions as follows:
To access your investment online please visit the client portal by clicking on the button below. If you are logging in for the first time, please create an account and add your investment with your account number or investment profile ID.
To redeem your holding, fill out the Redemption Request Form and have it signed by the authorised signatories on the account. Please download the Redemption Request Form here.
An investor may make a redemption request for any Units held by the investor which have been on issue for at least one month. Provided there is available cash for Aura Funds Management Pty Ltd to do so. Valid redemption requests will be processed at the redemption date in each month and will generally be paid on the date which is ten days after the relevant redemption date. There is no guarantee that there will be any available cash for redemption.
A valid redemption request is one received by Aura Funds Management Pty Ltd between 30 and 45 days before the relevant redemption date. There will typically be a redemption date on the first business day of each month.
The Fund has had a very low rate of defaults within underlying loans, lending vehicles or late payments. No defaults of underlying loans have led to capital losses within the Fund.