COMING SOON: New global income opportunity12 July 2021
We are pleased to announce that we have collaborated with the highly regarded and award-winning global credit specialists Bentham Asset Management to establish the VanEck Bentham Global Capital Securities Active ETF (Managed Fund) (ASX: GCAP), which will be launching in the coming weeks, subject to regulatory approvals.
Bentham Asset Management is well known for its long-term and proven track-record investing in global capital securities. GCAP will offer Australian advisers and investors a true and compelling alternative to Australian hybrids, all with the benefit of full transparency and active management with a best-in-class global credit manager.
What are global capital securities?
- Capital securities include a range of securities including but not limited to Additional Tier 1 Capital, Contingent Convertible (CoCos) and subordinated debt securities.
- These securities are similar in nature to Australian ‘hybrid’ securities, that is, securities that have both equity-like and debt-like characteristics.
- Unlike Australian listed hybrids these securities are often only available Over-The-Counter (OTC) to large institutions.
- The higher yields available on capital securities provide investors with the potential for higher income for a commensurate increase in risk relative to Australian and global bonds.
Importantly, the size of the global capital securities market is far larger and deeper than Australia’s hybrid market, with better liquidity and more diverse issuers.
Bigger universe equals greater opportunities
Global capital securities market:
Source: Bentham, Bloomberg, as at 21 June 2021. Global Capital securities includes select currencies: (USD, GBP, CAD, EUR and AUD) EU/UK Bank CoCos (>$350m issue), Large Cap US Bank Tier 1 (> 500m issue) ($1000 par only), Bank Tier 2 (globally) (>500m issue), Insurance Tier 2 (globally) (>500m issue). ASX hybrids includes Subordinated debt.
Global universe offers better yield to call opportunities
Chart: Global relative value of hybrids
Source: Bentham, Bloomberg, as at 21 June 2021
VanEck Bentham Global Capital Securities Active ETF (Managed Fund) (ASX: GCAP)
To take full advantage of the opportunities within global capital securities, it is necessary to take an active approach to identify mispricing opportunities.
GCAP will be an actively managed high conviction portfolio of a minimum of 30 global capital securities selected based on a top-down and fundamental credit analysis by Bentham who have a 18 year track record in managing this asset class.
Initial offer - an Australian first
The first active global capital securities fund on ASX.
Global income opportunity
GCAP offers an opportunity for investors to diversify their income away from Australian exposures by harnessing a deep and sizeable global universe. GCAP is hedged to AUD.
Actively managed by Bentham Asset Management – a leading credit specialist with significant global experience
The strategy is professionally managed by Bentham Asset Management, a leading and award-winning global credit specialist with a proven track-record and strong pedigree in credit investing.
Fundamental high conviction exposure
A high conviction portfolio selected on the basis of top-down and fundamental credit analysis.
Dividend frequency is monthly
Key risks: An investment in the Fund carries risks associated with: fixed income and credit markets, unsecured subordinated debt, below investment grade securities, counterparty credit, derivatives, foreign currency, fund manager, fund operations, hedging, interest rates, international investing, issuer credit, loss absorption liquidity and market makers.Register your interest to receive the latest information about GCAP
VanEck Investments Limited ABN 22 146 596 116 AFSL 416755 (‘VanEck’) is the responsible entity and issuer of the VanEck Bentham Global Capital Securities Active ETF (Managed Fund) (GCAP). Units in GCAP are not currently available. GCAP has been registered by ASIC and VanEck has lodged an application with ASX for units in the fund to be admitted to trading status on ASX. The PDS will be lodged with ASIC, and it will be made available at the end of the exposure period at www.vaneck.com.au. This is general advice only, not personal financial advice. It does not take into account any person’s individual objectives, financial situation or needs. Read the PDS and speak with a financial adviser to determine if the fund is appropriate for your circumstances. An investment in GCAP carries risks associated with: emerging markets bonds and currencies, bond markets generally, interest rate movements, issuer default, currency hedging, credit ratings, country and issuer concentration, liquidity and fund manager and fund operations. The PDS will detail the key risks. This information is believed to be accurate at the time of compilation but is subject to change. VanEck does not represent or warrant the quality, accuracy, reliability, timeliness or completeness of the information. To the extent permitted by law, VanEck does not accept any liability (whether arising in contract, tort, negligence or otherwise) for any error or omission in the information or for any loss or damage (whether direct, indirect, consequential or otherwise) suffered by any recipient of the information, acting in reliance on it.