Independent rating agency, Australia Ratings has upgraded its investment rating of the Aura High Yield SME Fund to ‘very strong’, its second highest rating on the investment rating.
The upgrade reflected an “increased confidence in the ability of the manager to identify robust non-bank lending platforms to gain exposure to the SME sector”, the ratings house said.
The fund, which is managed by Aura Funds Management, invested in non-bank lenders specialising in providing finance to small and medium (SME) businesses in Australia by structured notes backed by secured and unsecured loans to SMEs and provided attractive risk-adjusted returns.
It offered monthly income, targeting returns at 10 to 12 per cent per annum, net of management fees, with low level of capital loss from diversified pools of loans in each tranche of its investments.
As at March, 2019, the fund had $18.5 million assets under management.
According to Australia Ratings’ analyst, Maggie Callinan, the fund offered an attractive investment on a risk-return basis that captured the higher interest rate premium of SME loan without the substantial cost overhead typical of a bank lender.