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Matrix asset-based lending fund benefits from credit crisis

London-based Matrix Group's Matrix Asset Based 2 Fund is benefiting from the credit market crisis, according to its new York-based investment manager, Stillwater Capital Partners.

'The asset-based lending marketplace has been positively affected by the global liquidity crisis and the unprecedented volatility this has caused in the credit markets,' Stillwater says.

'We expect to see continued strong returns from our managers and plan to increase the number of funds in our portfolio from 33 to 40 in the near future. Each new manager will provide distinct uncorrelated returns and sources of increased diversification.'

The Matrix Asset Based 2 Fund is a fund of funds investing in 33 underlying pure asset-based lending managers that self-originate and self-underwrite all the loans in their portfolios. These funds compete with regional banks to provide flexible one-stop financing for middle-range companies.

Almost all of the asset-based managers in the Matrix Asset Based 2 Fund are seeing an increase in good quality deal flow as a direct result of the credit crisis and an increasing reluctance by banks to lend. In addition, the managers are experiencing an improvement in the structure, terms and value of their deals.

The fund, which was launched in August and is available through institutional and retail share classes, aims to achieve consistent returns of around 10 per cent a year and to have a low correlation with major stock and fixed-income market indices.

The retail share class carries a minimum investment of GBP10,000 and is suitable for UK self-invested personal pensions and small self-administered pension schemes as well as offshore bonds. There is an initial charge of 5 per cent and an annual management fee of 1.9 per cent, with 0.4 per cent trail for independent financial advisers (the annual management fee for the institutional class is 1.5 per cent).

The Asset Based 2 Fund is open-ended, but Matrix recently launched a closed-ended version with a minimum investment of GBP50,000 that invests all its assets in the retail sterling shares of the open-ended fund.

It is the third closed-ended fund in the Matrix range, following the Matrix Horizon Closed End and Matrix Max Closed End funds, and allows UK investors to participate in the returns from Matrix Asset Based 2 Fund within a structure where gains will be charged as capital gains rather than income.

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