BNP AM

The sustainable investor for a changing world

Diversified Loan strategy

Key features

Seamless and scalable access to granular personal and SME loans selected from high-quality lenders

Cash-on-cash returns uncorrelated to traditional equity and fixed income

Stable cash flows from loan repayments absent significant increase in prime household non-payment rates

Investment philosophy 

We seek to provide true diversification versus large corporate and government credit exposure alongside sustainable alpha generation through:

  • Finding the right originators. We cast a wide net to find high-quality originators with a proven track record in loan sourcing, underwriting and servicing
  • Selecting the right loans. We seek to identify attractive loan investments by geography (e.g. country, MSA), borrower type (e.g. prime, near-prime, SME) and security interest (e.g. unsecured, secured, guaranteed)
  • Purchasing on the right terms. We source loans from approved originators in primary markets (e.g. direct lenders) or secondary markets (banks & direct lenders) with the flexibility to reallocate new purchases across originators in real-time

Investment process

Our Diversified Loan strategy follows a conservative and prudent investment process, with a focus on identifying the strongest lenders and best loans to deliver stable returns through economic cycles. It includes:

  • Opportunity screening
  • Quantitative and qualitative analysis
  • Investment terms
  • Risk management
  • Continuous benchmarking

Team and resources

Our Diversified Loan team is based in Amsterdam and led by Tonko Gast, 24 years of industry experience. The team is part of Dynamic Credit Group, which joined BNP Paribas Group in 2022.

The team has extensive experience in analysing and managing granular loan portfolios. They benefit from access to our wider Private Debt and Real Assets (PDRA) investment group, Sustainability Centre, Quantitative Research Group, Macro Research team and the wider BNP Paribas network.

Disclaimer

Past performance is not indicative of current or future performance.

Any views expressed here are those of the author as of the date of publication, based on available information, and subject to change without notice. This material does not constitute investment advice.

Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial investment. There is no guarantee that the performance objective will be achieved.

Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).

BNP Paribas Asset Management seeks to integrate environmental, social and governance (“ESG”) factors into all of our portfolios as a means to mitigate certain short, medium and long-term financial risks, identify better long-term investments, and encourage more responsible corporate behaviour. We will never subordinate our client’s interests to unrelated objectives. Certain issuers and industries are excluded from our actively managed portfolios based upon our view of their ESG performance and risk profile. As a result, we may pass up certain opportunities when these excluded issuers or industries are in favour. Due to significant gaps in disclosure regimes around the world, we may need to rely upon voluntary disclosures by issuers, which are often not audited. We therefore may not have consistent access to complete, accurate or comparable information about the ESG performance of our holdings. Please consult the applicable offering document for more information about the specific ESG strategy employed by each investment strategy since a given strategy may not have specific ESG guidelines, and investments are not limited to securities that are ESG compatible.