The non-bank lending asset class is rapidly building a reputation for robust returns with low correlation with mainstream fixed income and equity markets.
NN Investment Partners saw a 33 per cent growth in its specialist alternative credit boutique in terms of assets under management in 2017, according to a statement by the firm.
In the year to 31 December 2017 the Netherlands-based asset manager says that it saw committed funds from institutional investors rise by a third into its various alternative credit strategies when compared to 2016. The firm had about €14bn of assets under management at the end of 2016 within alternative credit.
Han Rijken, head of specialised fixed income at NN IP says that alternative Credit is now, owing to recent strong returns with low correlation with mainstream fixed income and equity markets, seeing a greater uptake among investors.
“Given its focus on sometimes illiquid markets, as well as complex and thematic drivers, there is strong scope to deliver additional returns through active management,” he said.
“Managing this asset class does not only consist of traditional asset management, but also sourcing, structuring, trade execution and creating a sustainable investment solution to the specific needs of the investor (eg. regulatory compliance),” he added.
In addition to this, he adds that the varied risk premia and different underlying borrowers enables alternative credit to offer strong diversification characteristics.
NN Investment Partners recently commissioned research from 100 institutional investors to which revealed an increasing overall demand for the asset class among investors wishing to hedge against a rising rates environment.
AltFi is returning to Amsterdam for its second annual Summit in the city. The inaugural event last year was a roaring success, with key figures from across Continental Europe's alternative finance and digital banking sectors highlighted. These included Jeroen Broekema, managing director of Funding Circle Netherlands, and Mieke van Engelen, head of innovative partnerships at ABN AMRO's standalone lending platform, New10.