The MVP Premium Fund is committed to producing superior risk adjusted returns with limited correlation to traditional asset classes. The Fund does so by pooling capital and participating in loans by investing in underlying funds that issue credit to borrowers, secured against assets. This is a strategy known as asset based lending (ABL). These underlying funds are specialist middle market lenders and originate loans, within varying maturities, to small and mid-cap companies. Traditional banks do not hold the expertise, speed or flexibility to serve this tranche of the market.
The Fund is also well positioned to make opportunistic investments and take advantage of arbitrage opportunities in the ABL space caused by the market dislocation of the last 3 years. Returns are generally generated through loan interest accrual but can also be generated from positions purchased at a discount. The realizations of these returns are dependent on the future performance and monetisation of the assets. In the event the borrower defaults on a loan, the underlying fund takes control of the collateral and, upon liquidation of the assets, receives money back plus interest. Due to the nature of the collateral, liquidation may take some time.
With low correlation to traditional asset classes, the Fund looks to outperform its peers when measured by reward per unit of risk or Sharpe Ratio and Sortino Ratio. Typically only available to institutional investors with much higher entry levels, the Fund provides low entry level access, making it accessible to a broader investor universe. Currently available in two share classes GBP and EUR, the minimum investments are ?10,000 and ?10,000 respectively. The MVP Premium Fund (GBP) launched 1st September 2009 and the Euro Fund launched in May 2010.