John Hancock Investment Management has launched a fund that lets accredited investors invest in a wide variety of loan assets, the fund sponsors announced yesterday.
The new fund, the John Hancock Asset-Based Lending Fund, expands the alternative products offered by John Hancock Investment Management. The fund is subadvised by Marathon Asset Management, a global credit investor with nearly 25 years of experience investing across multiple sectors, including structured credit and asset-based lending.
The fund aims to provide high current income and, to a lesser extent, capital appreciation, John Hancock Investment Management said. The fund’s managers plan to invest at least 80% of its net assets (plus any borrowings for investment purposes) in asset-based lending investments, which may include distressed loans.
The fund is managed by Louis Hanover, Marathon’s co-founder, managing partner and chief investment officer; by Andrew Springer, partner and senior portfolio manager; and by portfolio manager Edward Cong.
“The fund pursues a flexible, all-weather approach to private credit with the goal of delivering strong returns with low volatility and low correlation to other asset classes across the market cycle,” John Hancock Investment Management said. “This will enable it to take advantage of a robust pipeline of asset-based capital solutions across sectors in which Marathon has deep analytical capabilities and experience.”
The assets include:
• Healthcare loans and royalty-backed credit, including healthcare loans secured by revenue, intellectual property rights, and royalty streams primarily from FDA-approved drugs and devices;
• Transportation assets, such as loans and leases backed by commercial aircraft and shipping vessels;
• Residential mortgage loans—the origination and acquisition of residential real estate loans and legacy mortgage loans pools include distressed or nonperforming loans and newly originated nonagency mortgage loans;
• Commercial real estate loans—the origination and acquisition of commercial real estate loans are secured by housing-related and traditional commercial real estate property types;
• Consumer-related assets—the acquisitions of consumer loans include distressed loans and high-yield asset-backed securities backed by various forms of non-mortgage household debt, which is largely focused on select market segments such as automobile loans and leases, credit cards and personal installment loans;
• Corporate asset-based credit—asset-based corporate credit is secured by real estate, equipment, receivables, inventory and intellectual property rights, among other assets; and
• Liquid securitized credit—these are securities backed by residential real estate, commercial real estate, collateralized mortgage obligations, secured corporate loans and other asset-backed securities.
Marathon determines the portfolio’s sector-level asset allocation and considers several factors in its asset allocation, including, but not limited to, portfolio-level credit risk, geographical and industry diversification, interest-rate risk, capital deployment optimization and macroeconomic conditions. The fund is not limited in the amount of its assets that may be allocated to any sector, John Hancock Investment Management said.
The fund’s shares are illiquid and, therefore, the fund should be considered a speculative investment with substantial risks. Investors could lose all or substantially all of their investment. Shares of the fund are not listed on any securities exchange, and it is not anticipated that a secondary market for the fund's shares will develop. Therefore, the investment may not be suitable for investors who may need the money they invest in a specified time frame, the firm said.
Additional information on the fund can be found here.