Antares Income Fund targets steady income


by Clive Tompkins

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Transcription of Finance News Network Interview with Antares Income Fund Investment Manager, Ken Hyman.

Donna SawyerHello, I’m Donna Sawyer for the Finance News Network and joining me from Antares Capital to discuss the launch of their Income Fund is Investment Manager, Ken Hyman. Ken welcome back.

Ken Hyman: Hi Donna, it’s great to be here.

Donna Sawyer: Investors are facing increasing challenges as they seek higher returns amid falling cash rates. Tell me about the Antares Income Fund and what does it offer to investors?

Ken Hyman: Well investors are seeing lower cash rates and much tighter term deposit margins. As an example, an investor investing in a 12 month term deposit a year ago at 4.6 per cent, would be reinvesting now at 3.4 per cent for another 12 months. Antares have been managing income products for the last 20 years and we think now is the right time, to introduce an income product to the retail market. We are targeting our returns better than term deposit rates. We’re targeting ample liquidity, so we’d be looking for investors to be able to redeem within 24 hours. Regular and staple distributions on a quarterly basis, and capital preservation.

Donna Sawyer: What is the size of your Fund and what is your benchmark?

Ken Hyman: So the initial size is $50 million, the benchmark is the UBS bankable index, which we plan to outperform by over one per cent.

Donna Sawyer: So how do you identify investments that will deliver bankable returns?

Ken Hyman: At Antares we target safer yields. Over time, we’ve developed analytical processes models that highlight return per unit of risk. We expect to generate yields equal to our peer group, for about two thirds of the risk that they carry in their portfolios.

Donna Sawyer: One of the big concerns for investors, particularly those nearing retirement, is risk. What are some of the key risks that they are facing, and how does Antares mitigate those?

Ken Hyman: We think the two key risks are redeeming the investments when the investors need the money, and safe guarding the capital value of those investments. At Antares we take a lot of pride in the fact that through the GFC we managed, we maintained liquidity for investors. We met all the redemptions when they came in and we preserved capital values, during that period. In fact these two risks are in the DNA of Antares, and they are key features of the new income product that we are introducing.

Donna Sawyer: So what are the main risks you are considering right now, and how are you managing those risks?

Ken Hyman: The flood of cheap money that has flowed from the quantitative easing of the US, has resulted in a search for yield. And it has driven credit spreads to what we believe are some of the tighter levels experienced, over the recent past. Now Antares top-down scenario process is looking for some pretty decent global growth, over the next one to three years. So we’re looking for companies to do quite well, and we believe that credit will behave reasonably well. However, the cheap money has forced the pricing in credit to what we believe are expensive levels. And to mitigate the risk of a backup in credit spreads, Antares has shortened the credit exposure of this portfolio.

Donna Sawyer: Give me an idea of the type of investor this Fund is suitable for?

Ken Hyman: Typically it would be an investor at or approaching retirement who’s targeting steady returns, liquidity and security.

Donna Sawyer: What are the key benefits of the Fund for investors?

Ken Hyman: I think the four key benefits are earning better returns than term deposits, regular steady income, liquidity when it’s required and capital preservation.

Donna Sawyer: Finally Ken, how do investors get exposure to Antares Income Fund?

Ken Hyman: It’s available for investors through MLC Wrap or directly through Antares.

Donna Sawyer: Ken Hyman, thanks for the introduction to Antares Income Fund?

Ken Hyman: Thanks and good to be here.