Barrenjoey Asset Backed Income Fund

The Fund supports the debt funding needs of Australian financial institutions (principally Non-Bank Financial Institutions or NBFIs). The Fund is an unregistered managed investment scheme. 

The Fund will primarily invest in a diversified portfolio of subordinated (also referred to as mezzanine) asset backed securities and notes issued by Australian financial institutions (principally non-banks) via special purpose securitisation funding vehicles. The proceeds of investment will be used by the borrower / issuer to fund underlying diversified asset pools represented by consumer and commercial loans.  

The Fund may borrow for short-term liquidity management purposes, including to manage timing differences between the settlement of investments and applications or redemptions. Borrowing will not be used to permanently increase the investment exposure of the Fund or create leverage. 

By pursuing this investment strategy, the Fund seeks to provide Investors with attractive risk adjusted returns over the life of the Fund. Fund investments are expected to generate stable income flows on a floating interest rate basis coupled with capital preservation and low volatility, non-correlated to equities. The target return profile is underpinned by the expectation of reduced investor competition / participation in the subordinated tranche of the capital structure and an illiquidity premium relative to actively traded debt instruments. The floating rate nature of the portfolio is designed to provide protection against rising interest rates and inflation. Downside capital protection is provided via loss absorbing equity features and investor protections present in securitisation structures. 

Investments are expected to be held to maturity.  

The experience of the Barrenjoey team will be utilised in the fund-raising process, the sourcing and screening of investment opportunities, the deployment of capital and ultimately the delivery of the Fund’s investment objectives. 

An institutional grade funds management operating, and administrative platform has been established by Barrenjoey through partnering with high quality external service providers coupled with in-house capability. This ensures that the funds management operating platform is robust, compliant, and scalable. It also helps ensure a quality investor experience in terms of onboarding, reporting, and administrative support as required. 

Highlights

^{1. Past performance is not a guarantee or indication of future performance. Performance is reported net of all fees.}

Investment Objective 

The Fund has a target return of the RBA Cash Rate plus 4.00% to 5.00% per annum (net of fees and costs) over the life of the Fund. 

Investment Strategy 

The Fund’s core investment strategy is focused on investing in asset backed notes and securities issued by Australian financial institutions (principally non-banks) via private debt warehouse securitisation vehicles and residential / commercial mortgage-backed securities (RMBS / CMBS) and asset backed securities (ABS) issued in the public market or via private placement. Fund leverage is not permitted other than for short-term liquidity purposes.  

Form of investments: 

Fund investments are expected to consist mainly of subordinated notes or securities issued by special purpose securitisation funding vehicles. The Investment Manager believes this part of the capital structure offers attractive risk adjusted returns relative to other debt investment alternatives. The Fund’s core assets are expected to be entirely floating rate in nature. Interest rate hedging will not be undertaken by the Fund. For liquidity management and operational reasons and considering cash flow timing differences, a proportion of invested funds may be held in cash or cash equivalents including short-term bank term deposits and senior notes or securities issued by financial institutions. 

Geographical: 

The Fund will only invest in Australian dollar denominated assets, issued by entities with an operating business in Australia. 

Diversification: 

The Investment Manager will seek to diversify the investment portfolio of the Fund as it deems appropriate to reduce risk. Diversification will occur based on issuer, underlying collateral type and other relevant economic and commercial factors. 

Duration of investments: 

In terms of investment duration, private debt warehouses are typically committed for up to 24 months and are revolving in nature with cash proceeds reinvested. 

Subordinated notes are often fully drawn, and this will be the Manager’s preference, otherwise undrawn fees apply. Expected duration is influenced by a number of factors including the refinance of warehouse facilities at the end of the availability period, market conditions and the timing of warehouse funding term outs. Public (or privately placed) securitisations are amortising with investment duration expected to be in the range of 3 to 4 years depending on the underlying collateral type and legal structure. Actual duration in such securitisations is influenced by the actual versus expected profile of underlying loan repayments.

The Australian Non-Bank Financial Institution sector is a well-established and profitable sector which plays an important role in the overall economy, providing finance to consumers and commercial businesses including those that may be unable to obtain bank funding due to risk appetite constraints. The principal source of debt funding for Non-Bank Financial Institutions is via special purpose securitisation vehicles. These can be in the form of private debt warehouse facilities or capital market securitisation funding into the public market or via private placement – representing the periodic term out of private debt warehouses into the capital markets, the purpose of which is to refresh warehouse capacity and demonstrate market liquidity to bank and other lenders.  

Capital market funding is provided by the issuance of residential and commercial mortgage-backed securities (RMBS, CMBS) and asset backed securities (ABS). RMBS, CMBS and ABS are provided formal credit ratings by one or more recognised credit rating agencies. This approach to funding contrasts with the banking sector which is principally reliant on deposits, term funding and subordinated capital instruments for funding. 

The Fund’s investment strategy focuses on Non-Bank Financial Institutions (NBFIs) which represent a large addressable investment market given the sector’s significant reliance on securitisation funding. Flexibility also exists for the Fund to invest in asset backed notes and securities issued by banks.
  
The NBFI market share of the financial system is approximately 5% representing $300.0 billion (RBA April 2024 Bulletin) of lending assets (excluding managed funds) of which the majority is funded via securitisation funding vehicles. The NBFI sector is growing, and it is Barrenjoey’s view that its market weighting will gradually increase as has been the case in other developed markets such as the US, UK, and Europe.  

The Trustee in consultation with the Investment Manager intends to permit redemptions on a quarterly basis. Investors may apply to redeem their Units by sending a written Redemption Request to the Fund’s Registrar. 

Redemption Requests must be received at least 1 month in advance of the subsequent calendar quarter end. The Trustee may, in consultation with the Investment Manager, accept or reject a Redemption Request in its absolute discretion.  

The Investment Manager’s intention is for redemption proceeds to be determined based on the quarter end NAV (net of applicable redemption transaction costs) and generally paid within 15 Business Days of the applicable quarter end.

Pro rata limitations may apply including where Redemption Requests cumulatively represent more than 5% of the Fund’s NAV at a month end. Please refer to Section 4 of the Information Memorandum. for further details. 

At Barrenjoey Investment Management, our clients sit at the core of what we do. We are committed to delivering high-quality, innovative investment solutions that are shaped by a deep understanding of our clients’ unique needs.

With almost two decades of experience, our expert teams work collaboratively to provide a carefully selected portfolio of investment strategies that reflect our clients' goals. We bring to market active investment solutions managed by Airlie Funds Management (Australian equities), Barrenjoey Private Capital, Magellan Global Listed Infrastructure, Magellan Global Opportunities and Vinva Investment Management (global and Australian equities).

We believe in building enduring relationships — grounded in trust, transparency and a shared commitment to long-term outcomes. Our approach is defined by quality and agility, enabling us to respond to client needs with insight and understanding. Whether navigating complexity or identifying opportunity, our expert teams go above and beyond to deliver value.

Barrenjoey Investment Management is headquartered in Australia and is a wholly owned operating subsidiary of the ASX listed Barrenjoey Group Limited (ASX:BJY). Barrenjoey provides capabilities across Financial Markets, Corporate Finance and Investment Management

Eric started his career as a chartered accountant before moving into financial services. He has over 25 years’ experience across merchant, corporate and institutional banking in the UK and Australia. This includes roles as NAB Group Treasurer and EGM Corporate Finance with responsibility for securitisation origination and debt capital markets. He was also Chief Risk Officer for NAB’s Corporate and Institutional Division holding significant credit risk delegations for financial institution lending. In more recent years, he has focused on the non-bank sector, supporting, and advising Cerberus Capital Management on the build out and funding of their Australian non-bank portfolio companies, followed by the Managing Director and CEO role at a private capital fund manager and non-bank lender. 

He has held Board roles at four non-bank entities. Eric joined Trefor Capital in July 2023 as Principal, and following the transfer of the management of the Fund to Barrenjoey, Eric joined the Barrenjoey Group. 

Eva is an experienced finance executive with extensive experience in leading finance and treasury teams gained in a range of senior roles in Australia and the UK for more than 25 years. Starting her career at Price Waterhouse as a Chartered Accountant, Eva moved to Lehman Brothers in London progressing to Vice President in the Equity Finance area. Her roles have included Group Treasurer of Latitude Financial Services, responsible for the strategic direction of the treasury function where ABS was the main source of funding. 

She was previously the Head of Group Funding at National Australia Bank (NAB) where she delivered the group’s term-funding plan across a range of capital markets products globally including RMBS and established a number of inaugural funding platforms. Eva joined Trefor Capital in September 2024 as an Investment Committee Member and Portfolio Manager. Eva has served as a board member of the Australian Securitisation Forum’s national committee for four years over two terms. Following the transfer of the management of the Fund to Barrenjoey, Eva joined the Barrenjoey Group.