Watch now:  https://youtu.be/SEXjUh-RHXE

Navigating the Current Investment Landscape: Insights from Mark Sherwood of iPartners

In a recent discussion on alternative investments, Mark Sherwood of iPartners shared valuable insights into the current investment climate, particularly focusing on credit investments and their potential returns.

The Golden Era for Credit Investors

Sherwood begins by declaring the present time as the most opportune moment for credit investors in the last 15 years. He forecasts a positive outlook for credit in the coming year, with base rates at 4-5%, investment-grade credit at 7-8%, and high-yield credit in the mid-teens. This scenario presents a plethora of opportunities for investors, especially in a high-yield environment that is expected to persist longer than the market anticipates.

Focusing on Senior Asset-Backed Lending Opportunities

Delving into specifics, Sherwood highlights a keen interest in senior asset-backed lending opportunities. iPartners is particularly focused on funding non-bank lending businesses in Australia, providing them with a secure ongoing funding source. This strategy allows for a thorough assessment of loan books and direct security, positioning these investments as both lucrative and secure.

Economic Downturn and Interest Rate Dynamics

In the context of a slowing economy and rising interest rates, Sherwood emphasizes the importance of understanding consumer segments and sectoral exposures. iPartners aims to avoid the most stressed consumer segments, such as lower-income earners, who are likely to be more affected by personal loan burdens. This approach is crucial in navigating the high-interest rate environment and ensuring sustainable investment returns.

Business Resilience Amidst Rising Borrowing Costs

Another critical aspect of investment strategy, according to Sherwood, is assessing a business's ability to absorb or pass on higher borrowing costs. This understanding is vital for determining the resilience and potential profitability of a business in a prolonged high-cost funding environment.

Avoiding Recession and Consumer Resilience

Addressing concerns about a potential recession, Sherwood is optimistic. He notes the resilience of the consumer, driven by employment and wage growth, which has been stronger than anticipated. He predicts a 'soft landing' rather than a recessionary environment, with consumers likely to be more frugal yet resilient in the face of economic challenges.

Launching a New Bond Income Fund

Finally, Sherwood talks about iPartners' new bond income fund, launched to capitalize on the current market conditions. This fund focuses on high-grade corporate bonds and asset-backed securitizations, aiming to provide stable income with minimal volatility. The fund's strategy is to stick to floating rate notes, avoiding the unpredictability of yield curve movements and ensuring consistent returns for investors.

In conclusion, Mark Sherwood's insights offer a comprehensive overview of the current investment landscape, highlighting the opportunities and strategies for navigating through a challenging economic environment. His emphasis on credit investments, particularly in senior asset-backed lending and high-grade bonds, presents a compelling case for investors looking to maximize returns while managing risks effectively.