Today, investors have limited options when it comes to securing attractive yields. UK interest rates, money market funds, cash deposits and gilts are at or near historic lows. As a result, many yield-seeking investors have an increased exposure to equities, potentially taking unnecessary market risk in order to secure income.
Diversification is key
The most effective strategy for minimising risk is diversification. A well-diversified portfolio consists of different types of securities from diverse sectors with exposure to multiple underlying assets. While most investment professionals agree that diversification is no guarantee against a loss, it is an important component assisting investors reach their financial goals, while minimising risk.
Attractive risk adjusted yields are available in alternative asset classes such as Direct Lending. Triple Point’s Income Service aims to provide attractive fixed returns through a diversified portfolio of Direct Lending investments.
What is Direct Lending?
Direct Lending is a form of debt in which lenders, other than banks, make loans directly to companies. In Direct Lending, the borrowers are typically small or midsized companies, rather than large, listed companies, and the lenders tend to be asset management firms or non-bank lenders
The case for investing in Direct Lending:
• Strong investment performance
Private debt has consistently outperformed multiple key fixed income indices, from an absolute return point of view.
• Low volatility
Volatility in the Direct Lending sector has been low when compared to traditional capital markets, with returns being stable through market cycles, relative to equity indices.
• Underlying protections
Direct Lending brings a number of structural protections as part of the due diligence process before a loan is made, to protect investors from the risk of loss.
Each individual investment through Triple Point’s Income Service is exposed to a wide spread of sectors, differing in size and loan terms, combining to provide investors with diversification within their investment.
• Uncorrelated returns
Due to the current correlation between listed bonds and equities, investors are considering other asset classes to diversify their portfolio, such as Direct Lending.
Triple Point’s Income Service generates attractive fixed returns by providing funding to thousands of carefully-vetted UK businesses
Investors benefit from Triple Point’s extensive experience as an investment manager in the SME Finance sector. Funds raised are used to provide loans, leases and other asset finance to a large and diverse range of UK SMEs. As a leader in the private debt market, Triple Point currently manages over £350m of assets in our lending and leasing strategies and has provided funding to over 100,000 businesses.
Risk Warning: Your capital is at risk. There is no guarantee that target returns will be achieved and investors may get back less than they invested. Tax rules and reliefs are subject to change.
Cash is King: How founders should decide their cash runway
Triple Point’s Venture Investor, Seb Wallace, discusses one of the most important issues that ...
Surge in VCT demand calls for greater focus on investment approach
The number of people investing in venture capital trusts (VCTs) has hit the highest level in over a ...
VCTs: Addressing the hazards of early stage investing
The early years in a business’s life are often its most critical. During this time, it has to ...