The one stop solution
Multi-asset credit (MAC) funds emerged in the aftermath of the global financial crisis and have been widely promoted as a comprehensive, liquid credit solution. They provide access to a broad range of credit securities, asset classes, sectors, and geographies conveniently packaged in a single structure. MAC funds offer two key advantages:
- They are operationally convenient, allowing investors to gain exposure to multiple credit asset classes through a single allocation.
- The multi-sector mandate provides investment managers with a broader opportunity set to deliver strong risk-adjusted returns.
Given the comparative maturity of the cohort, we believe it is timely to re-explore the MAC value proposition. Have MAC funds delivered better risk-adjusted return outcomes than their underlying constituents (e.g. high yield bonds and leveraged loans)? In this paper, we analyse the return drivers and delve into the different implementation styles across 21 different MAC investment managers.
Why now?
Even though credit spreads remain tight relative to historical levels, comparatively higher all-in yields and high equity valuations have supported credit assets. Under this backdrop, MAC strategies continue to gain traction among Australian investors. MAC funds (and their respective Australian unit trusts) have grown in number and experienced notable inflows over the recent period.
If you are interested in learning more about MAC funds and how it can work in your portfolio, contact your Frontier client team or a member of our Defensive Assets and Alternatives Team.
