Stable and attractive returns
The fund aims to produce stable and attractive returns, in comparison to equity and high yield markets, by investing USD in a portfolio of CLOs (Collateralized Loan Obligations) collateralized by a broadly diversified portfolio of primarily senior secured loans. The fund invests in CLO equity, CLO lower-rated tranches (generally BB) and CLO warehouses with a portfolio consisting of only US CLOs denominated in USD.
CLOs invest in senior secured loans, which typically have higher recovery rates compared to bonds as the borrower pledges all assets in favour of senior creditors who rank before most bond and equity investors. The loan recovery rates have historically been higher than bonds and have low sensitivity to interest rates due to their floating coupons. In addition, the loans have generally low volatility and low correlation to the other markets. The fund seeks diversification by CLO managers, vintage analysis, maturity and security type. The fund is active in the primary and secondary CLO market.
The CLO fund investments represent exposure to a very diversified pool of loans to over a thousand different obligors. The partners managing the fund have over 18 years of experience in the CLO business, possessing a unique knowledge of the CLO market and having established relationships and direct access to CLO managers, professionals and structuring banks. They have selected over 75 different primary transactions before setting up the Avenida CLO fund, generating an average mid-teen absolute return for their investors through disciplined, consistent investment and risk management processes.
8% - 12 %
- per annum target return