New York-headquartered Oakhill Advisers (OHA), the private markets platform of global asset manager T Rowe Price, plans to capitalise on secular tailwinds for private markets - and the challenges thrown up by an uncertain rate environment - by launching a flexible income fund offering Australian investors access to the US$2 trillion global private credit market.
By combining OHA’s alternative credit investment expertise with T. Rowe Price’s established distribution network, the new fund – the Flexible Credit Income Fund AUD (OFLEX AUD) – is aiming to expand access for high-net-worth Australian investors to diversify their portfolios with high-quality alternative credit.
The fund targets large-cap borrowers with similar financial characteristics to companies in the ASX200, offering exposure to offshore credit markets that can complement domestic holdings.
Having historically been reserved for institutions, the Flexible Credit Income Fund AUD (OFLEX AUD) launch marks the first time OHA’s multi-strategy credit approach has been made directly available to Australian wealth clients.
This new Australian unit trust is aiming to deliver income by lending primarily to large-cap companies across diverse industries, mainly in the U.S.
What’s expected to attract local high-net-worth investors is the fund’s flexibility to invest up and down the capital structure in both private and public credit markets.
In addition to direct lending, junior capital solutions and asset-based lending, the fund also offers access to collateralised loan obligation structures (CLOs) and special situations.
The fund also offered access to liquid credit, including syndicated loans and corporate bonds, that are traded in liquid markets and converted to cash without significant loss of value.
According to the firm, this approach allows the team at OHA to target opportunities with attractive risk-return profiles, particularly during periods of market volatility.
Commenting on the launch of the OFLEX AUD fund, Adam Nankervis, Melbourne-based partner and portfolio manager at OHA, told the market that current market dynamics are creating exciting opportunities for flexible capital within alternative credit.
According to Nankervis, OHA’s private equity-style lens to credit investing begins with sector-level conviction, identifying industries where OHA has deep expertise, and structuring deals accordingly.
“If you can have a consistent coverage and a team that has a real lens of what they like within that sector, you can ultimately minimise defaults and harvest what is the credit premium,” he explains.
“Our dynamic approach allows us to capture these opportunities for our clients while maintaining a disciplined risk framework.”
Rather than make market timing calls, OHA is trying to get assets to compete against each other to create a broad, constructive portfolio.
Meanwhile, Darren Hall, Australia and NZ country head at T. Rowe Price, noted that unlike most existing offerings in the Australian private credit market - which see significant concentration in real estate and higher-risk property development - OFLEX AUD delivers broad exposure across a wide spectrum of sectors.
“This disciplined diversification is designed to help mitigate sector-specific risks, while enhancing portfolio resilience for Australian investors,” he noted.
“The launch of OFLEX AUD reflects growing local demand for sophisticated alternative credit solutions among advisers and family offices.”
OHA manages around US$108 billion in alternative credit assets globally and has served Australian institutional investors for over 20 years.
Distributed by T. Rowe Price – which acquired OHA in December 2021 to accelerate its expansion into alternative markets - and issued by Channel Investment Management Limited, the fund will be available through Investor Directed Portfolio Service (IDPS) and Superannuation accounts.
