![“Offering daily liquidity and launching with €200m of invested capital, [the fund] caters to a wide investor base, providing a well-diversified and seasoned portfolio from day one with liquidity ready to be deployed,” said Kelly Hebert, M&G’s country head for Belgium, France and Luxembourg, in a press statement on Tuesday 5 November 2024. Photo: M&G Investments](https://assets.paperjam.lu/images/articles/mg-debuts-200m-asset-backed-se/0.5/0.5/640/426/684550.jpg)
M&G’s structured credit team, which oversees approximately €8bn in assets under management, announced the launch of the M&G investment grade asset-backed securities (ABS) fund on Tuesday 5 November 2024. This newly established fund is domiciled in Luxembourg as a Sicav. It has been classified under article 8 of the sustainable finance disclosure regulation (SFDR). The fund management team comprises Matthew Wardle, Scott Ellerby and Joseph Rice, who will focus on investing in high-quality, defensive assets backed by structured debt in sectors such as residential mortgages, automotive loans and consumer lending.
The fund launched with €200m of external client capital, primarily sourced from pension schemes and family offices. It aligns with M&G’s existing €4bn investment-grade ABS strategies and aims to offer daily liquidity to investors. M&G stated that the European ABS market is currently valued at approximately €550bn, creating a substantial investment opportunity.
Matthew Wardle, M&G’s head of investment grade structured credit, highlighted that asset-backed securities offer a “compelling investment case” due to their low correlation with other asset classes and attractive value compared to corporate and government bonds. Wardle further noted that the ABS market had shown resilience in the face of economic challenges such as high interest rates, inflation and increased costs for consumers and businesses. With inflation declining, continued low unemployment and healthy wage growth, Wardle expected the asset class to maintain a strong performance.
Kelly Hebert, M&G’s country head for Belgium, France and Luxembourg, observed continued institutional demand for ABS, as institutional investors see it as a fixed-income alternative offering a strong risk-adjusted yield. Hebert added that the credit resiliency and value appeal of asset-backed securities, combined with the fund’s provision of daily liquidity, make it an attractive option for wholesale investors who might have previously been hesitant due to perceived risks.