This material is intended for Institutional Investors (as defined in the Securities and Futures Act, Chapter 289 of Singapore) only and is not suitable or intended for persons who do not qualify as such.
As growth in developed economies slows and restrictive monetary policy rates start to bite, investors looking to alternative markets for portfolio diversification and attractive returns could well consider a relatively young, little-known, but high-quality asset class: household loans.
Loans to relatively high-income households in the US, Europe and potentially in Asia tend to exhibit low mark-to-market volatility and low defaults and come with a comparatively high coupon that helps absorb losses. Other characteristics of the loans, typically made to creditworthy earners to consolidate debt into a single, cheaper loan, include a 3-5 year maturity and full amortisation.
Tonko Gast, founder and CEO of Dynamic Credit Group and Portfolio Manager, discusses the asset class with Co-Head of the Investment Insights Centre Andrew Craig on this Talking Heads podcast.
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The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.
This material is produced for information purposes only and does not constitute: 1. an offer to buy nor a solicitation to sell, nor shall it form the basis of or be relied upon in connection with any contract or commitment whatsoever or 2. investment advice. It does not have any regards to the specific investment objectives, financial situation or particular needs of any person. Investors should seek independent professional advice before investing, or in the absence thereof, he/she should consider whether the investments are suitable for him/her.