Ares targets Aussies with credit fund
Ares’ head of Australia Teiki Benveniste has ambitious plans for the American firm’s first launch into Australia, encouraging Australians to diversify their portfolios into credit.
Benveniste joined Ares from Macquarie earlier this year following the firm’s joint venture with Fidante. While the firm had US$149 billion ($226.3 billion) in assets under management worldwide, it was fairly new to the Australian market apart from a few institutional clients which is why the joint venture with Fidante was so appealing.
Many of Fidante’s existing partnerships were with smaller boutiques whereas Ares already had a large presence outside of Australia.
“We wanted to partner with someone who understood the space and had those industry contacts. The joint venture is a strategic partnership for us,” Benveniste said.
“We had some institutional clients here but we want to take it seriously as Australia is an area where we can grow and the investment needs here are aligned with what we can provide.
"With cash rates falling from 1.5% to 0.75% people are looking for new solutions so this is a good time to come to market.”
As the Reserve Bank of Australia cuts rates, Benveniste acknowledged the country had ‘joined the club of lower for longer’ that has become prevalent in Europe and Japan.
This meant investors were forced to search for assets that would give them a higher income in a low-return environment. With this mind, Ares was due to launch its first credit fund in the next two months and had a pipeline of products due to be launched through the year.
In the US, Ares had 270 funds but Benveniste said existing funds would be adapted for the Australian market.
“We won’t just take existing strategies, we will look at what people need and decide how we can address those needs. It’s about building blocks and how you can mix them together rather than launching new products.”
Asked about the biggest risk for Australian clients, Benveniste said he was concerned about concentration where clients were holding the same risk in different forms, given the example of the banking sector.
“You could end up having various different exposures in your portfolio as you go up the yield curve but are they all the same risk? People need to keep that in mind when they are searching for higher yield,” he said.
“Australians mostly invest in investment grade and bank hybrids so they end up taking the same risks in big financials. We are looking at areas such as leveraged loans, direct corporate lending and asset-based lending where there is only a limited amount of exposure here.
“It is about adding different types of risks to your portfolio and working out where you can get an equivalent income but from a different type of risk.”
AUTHOR
Laura Dew
Recommended for you
First Sentier Investors chief executive, Mark Steinberg, is set to depart the asset manager after seven years.
Metrics Credit Partners has completed the acquisition of Taurus Finance Group and BC Investment Group as it looks to launch consumer lending arm Navalo.
AMP has announced to the ASX that it is being sued by property fund manager Dexus regarding the sale of its real estate and domestic infrastructure equity business.
Having seen inflows of US$5.6 billion to its fixed income funds in the last quarter, Janus Henderson has closed on a deal with life insurer Guardian to secure funds to boost its product development.
