In line with its aim to bring new investment opportunities to South African clients, Discovery Invest launched a market-first credit fund targeting annual returns in euros of 7% a year, net of fees and taxes.
The Discovery European Credit Opportunities Fund, managed by Ninety One, is a fund that offers access to a blend of primarily private credit, as well as public credit investments, in European and other global markets.
Since the global financial crisis, due to regulatory pressure, there has been a significant decline in bank lending to small- and medium-sized European companies. This has generated an opportunity for investors to receive highly attractive potential returns by investing in private credit funds as they replace banks and provide loans to these companies.
Kenny Rabson, CEO of Discovery Invest, says there are several benefits to investing in credit as an asset class.
“Investments in private credit funds can generate high stable returns and diversify an investment portfolio. Although capital and returns are not guaranteed, these opportunities offer potential attractive expected returns with a lower risk profile than global equities.”
The fund is available as a limited offer on Discovery Invest’s local lump-sum endowment with a minimum investment value of R200 000.
There is limited capacity for the Discovery European Credit Opportunities Fund, with the offer expiring when capacity runs out, but not later than 24 January 2022 (closing date for subscription). There will be no liquidity during the seven-year investment term. This means that clients will not be able to do switches or make withdrawals.
Lei Lei, Co-Head of European private credit at Ninety One, says: “We are delighted to be partnering with Discovery Invest to give investors access to European private credit. We provide bespoke loans to performing private European companies which are 100% secured against their assets to provide downside protection. Our borrowers pay interest on our loans over time, and it is these contractual payments that drive our targeted 7% net* annual return in euros for our investors.”
*The 7% annual target is net of fees and taxes.
The fund is available offered through a lump-sum endowment policy issued by Discovery Life, a licensed life insurer registered under the South African Insurance Act of 2017 and an authorised financial services provider (company registration number 1966/003901/06). The insurer reserves the right to review the product at any time. Discovery Life Investment Services Pty (Ltd): Registration number 2007/005969/07, branded as Discovery Invest, is an authorised financial services provider.
Product rules, terms and conditions apply. This document is meant only as information and should not be taken as financial advice. For tailored financial advice, please contact your financial adviser. This document does not include the full details of how our investment plans work. The information in this document must be read with the relevant fact files.