John Hancock Investment Management launches Loan Assets Fund

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John Hancock Investment Management has launched a fund that will allow accredited investors to invest in a variety of debt investments, the fund’s sponsors announced yesterday.

The new fund, the John Hancock Asset-Based Lending Fund, expands John Hancock Investment Management’s alternative product offering. The fund is managed by Marathon Asset Management, a global credit investor with nearly 25 years’ investment experience across multiple sectors, including structured credit and asset-based credit.

The fund aims to provide high current income and, to a lesser extent, capital appreciation, said John Hancock Investment Management. The fund’s managers plan to invest at least 80% of its net assets (plus any borrowings for investment purposes) in asset-based lending investments, which may include bad debt.

The fund is managed by Louis Hanover, co-founder, managing partner and chief investment officer of Marathon; by Andrew Springer, Partner and Senior Portfolio Manager; and by portfolio manager Edward Cong.

“The fund takes a flexible, all-weather approach to private lending with the goal of delivering strong returns with low volatility and low correlation to other asset classes throughout the market cycle,” said John Hancock Investment Management. “This will allow the company to benefit from a robust pipeline of asset-based capital solutions across all sectors where Marathon has deep analytical capabilities and experience.”

Assets include:

• Healthcare and royalty-secured loans, including healthcare loans secured by revenue, intellectual property and royalties primarily from FDA-approved drugs and devices;
• Transportation assets such as loans and leases secured by commercial aircraft and shipping vessels;
• Residential Mortgage Loans – Origination and acquisition of residential mortgage loans and legacy mortgage loan pools include distressed or non-performing loans and newly originated non-agency mortgage loans;
• Commercial Real Estate Loans – Origination and acquisition of commercial real estate loans are secured by residential and traditional commercial real estate types;
• Consumer-Related Assets – Consumer credit purchases include distressed loans and high-yield asset-backed securities backed by various forms of non-mortgage-backed household debt, largely focused on select market segments such as auto loans and leases, as well as credit cards and personal installment loans;
• Asset-based corporate loans – asset-based corporate loans are secured by, among other things, real estate, equipment, receivables, inventory and intellectual property; and
• Liquid securitized loans – these are securities backed by residential property, commercial property, secured mortgage obligations, secured corporate loans and other asset-backed securities.

Marathon determines the portfolio’s asset allocation at the sector level and considers multiple factors in its asset allocation, including but not limited to portfolio-level credit risk, geographic and industry diversification, interest rate risk, capital optimization and macroeconomic conditions. The fund is not limited as to the amount of its assets that can be allocated to any sector, said John Hancock Investment Management.

The Fund’s Shares are illiquid and therefore the Fund should be viewed as a speculative investment involving significant risks. Investors could lose all or substantially all of their investment. The Fund’s Shares are not listed on any stock exchange and it is not expected that a secondary market will develop in the Fund’s Shares. Therefore, the investment may not be suitable for investors who may need the invested money in a specific time frame, the company said.

More information about the fund can be found here.

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