Winners rationale

For the second consecutive year, Credit Suisse Asset Management demonstrated its innovativeness, agility, and attentiveness to investor needs via one of the year’s standout offerings for private investors across the industry — the Credit Suisse (Lux) Supply Chain Finance Fund.

The strategy at its heart aims to generate stable and uncorrelated returns, while providing investors with exposure to the still largely untapped asset class of trade receivables. It achieves this by investing in buyer-confirmed trade receivable notes acquired under a warehousing facility agreement with Greensill Capital, an independent financial services firm focused on trade receivable financing, with the underlying credit risk of the notes insured by insurance companies with a minimum rating of A by Standard and Poor’s or A2 by Moody’s.

The investment rationale behind the Credit Suisse (Lux) Supply Chain Finance Fund is pertinent. According to the firm, trade receivables offer investors a yield pickup while being short-term in nature, resulting in low sensitivity to changes in interest rates and spreads. Moreover, the market potential for supply chain finance remains largely untapped, despite the industry already accounting for some US$2 trillion in financeable payables worldwide and potential revenue pool worth US$20 billion¹. By investing in portfolios that are specialised in supply chain finance, investors stand to diversify the return profile of fixed-income investments.

More specifically, the solution aims to provide a significant yield enhancement over short-term fixed income alternatives, with a money market-like profile, multiple layers of protection (since underlying notes are secured by a claim against the debtor and additionally guaranteed by an insurance company), and no currency risk.

Credit Suisse Asset Management accompanied its sales drive in 2019 with a range of training and education initiatives in Hong Kong and Singapore designed to explore the asset class and strategy in-depth and to engage clients from private banks and clients on the outlook of trade receivables. That went beyond the firm’s already sophisticated service and support activities, helmed by a team of ten distribution professionals and product specialists in the region and further seven investment professionals in Europe.

As of 31 August 2019, and on a year-to-date basis (the period under consideration), net inflows from private banking clients into the strategy exceeded CHF 1.6 billion from a wide base — an achievement that speaks to Credit Suisse Asset Management’s ability to respond and innovate rapidly during a time when investor cash holdings in the region were high and the hunt for a yield pick-up equally acute.

Credit Suisse (Lux) Supply Chain Finance Fund is Asian Private Banker’s Best New Fund for 2020.

¹ Source: Supply-chain finance: The emergence of a new competitive landscape, McKinsey & Company, October 2015