First Eagle Investment Management, LLC (“First Eagle”) is
pleased to mark the one-year anniversary of the First Eagle Credit
Opportunities Fund (Ticker: FECRX). The Fund seeks to provide
current income with a focus on delivering strong risk-adjusted
returns over the long term by investing in a range of private and
public credit assets—including direct lending, middle-market “club”
loans, syndicated bank loans, asset-based loans and high yield
bonds. In the year since its September 15, 2020, inception, the
Credit Opportunities Fund returned 12.30%; as of August 31, 2021,
its distribution yield was 7.14%.1
“We believe the Fund’s launch was fortunately timed,” said
Christopher J. Flynn, President of First Eagle Alternative Credit.
“While the Fund had been in the planning stages since early 2020,
the Covid-related market dislocations that began in March allowed
us to be patient in seeding the portfolio. Once we ramped up in
September, there were ample opportunities to establish strong
foundational positions that we believe have the potential to
benefit our investors over the long run.”
The Credit Opportunities Fund is registered as a closed-end
interval fund. Providing investors with daily purchase
opportunities, monthly distributions when applicable and quarterly
redemption windows, the interval fund structure allows the Fund’s
portfolio managers greater flexibility to invest in alternative
income-generating assets—such as private credit and syndicated
loans—that historically have offered higher yields relative to
traditional securities in exchange for reduced liquidity. With no
requirements that investors be accredited or qualified and low
minimum investments, this differentiated investment solution is
available to retail investors often shut out of such
opportunities.
“We are very excited to mark this milestone, especially given
the strong inflows we have seen over the Fund’s first year,” said
Jack Snyder, National Sales Manager, Wirehouse and RIA Channel, and
Head of Retail Alternative Sales at First Eagle. “We believe this
success is attributable to the broad accessibility of the strategy
in a complex market, coupled with its robust historical performance
and attractive relative yield and what we expect to be ongoing
demand for alternative income-oriented strategies.”
Leveraging an institutional platform with decades of experience
in direct lending and tradable credit across multiple market
cycles, the Credit Opportunities Fund seeks to invest primarily in
senior-secured, first-lien corporate credit, which may better
mitigate downside compared with other income-oriented securities
such as bonds and preferred and dividend-paying stocks. Further,
the historically low correlation between alternative credit and
traditional fixed income investments suggests the Fund also may
serve as a diversifying complement to investors’ other portfolio
holdings.
ABOUT FIRST EAGLE INVESTMENT MANAGEMENT
First Eagle Investment Management is an independent, privately
owned investment management firm headquartered in New York with
approximately $113 billion in assets under management as of June
30, 2021. Dedicated to providing prudent stewardship of client
assets, the firm focuses on active, fundamental and
benchmark-agnostic investing, with a strong emphasis on downside
mitigation. Over a long history dating back to 1864, First Eagle
has helped its clients avoid permanent impairment of capital and
earn attractive returns through widely varied economic cycles—a
tradition that is central to its mission today. The firm’s
investment capabilities include equity, fixed income, alternative
credit and multi-asset strategies. For more information on First
Eagle, please visit www.feim.com. For information on the
Alternative Credit team at First Eagle, please visit
www.feac.com.
AVERAGE ANNUAL RETURNS AS OF 06/30/2021 (%)
Expense Ratio°
3 Month
YTD
Inception
Gross°°
Net
Adjusted°°°
Inception Date
First Eagle Credit Opportunities Fund –
Class A FECAX (without load)
2.39%
6.49%
8.21%
5.71%
2.57%
1.00%
12/02/2020
First Eagle Credit Opportunities Fund –
Class A FECAX (with load)
-1.20%
2.78%
4.43%
First Eagle Credit Opportunities Fund –
Class I FECRX (without sales charge)
2.62%
6.88%
10.23%
4.96%
1.82%
0.25%
09/15/2020
The performance data quoted herein represents past
performance and does not guarantee future results. Market
volatility can dramatically impact the fund’s short-term
performance. Current performance may be lower or higher than
figures shown. The investment return and principal value will
fluctuate so that an investor’s shares, when re- deemed may be
worth more or less than their original cost. Past performance data
through the most recent month end is available at www.feim.com or
by calling 800.334.2143. “With load” performance for Class A Shares
gives effect to the deduction of the maximum sales charge of
3.50%.
Management Fee Waived: Effective May 1, 2021, FEIM and FEAC have
agreed to waive all management fees and subadvisory fees payable to
them under the Management Agreement (defined in Prospectus) and
Subadvisory Agreement (defined in Prospectus) until April 30, 2022
(the ‘‘Management Fee Waiver’’), resulting in an Adjusted Net
Expense Ratio of 1.00% for Class A and 0.25% for Class I. The
Management Fee Waiver is not revocable during its term and amounts
waived pursuant to the Management Fee Waiver will not be subject to
any right of future recoupment in favor of FEIM and FEAC. °The
annual expense ratio is based on expenses incurred by the fund, as
stated in the most recent prospectus. FEIM has contractually
undertaken to waive and/or reimburse certain fees and expenses of
the Fund so that the total annual operating expenses (excluding
interest, taxes, brokerage commissions, acquired fund fees and
expenses, dividend and interest expenses relating to short sales,
and extraordinary expenses, if any) (“annual operating expenses”)
of the Class A and Class I shareholders are limited to 1.00% and
0.25%, respectively, of average net assets, respectively. This
undertaking lasts until April 30, 2022, and may not be terminated
during its term without the consent of the Board of Trustees. The
Fund has agreed that each of Class A and Class I will repay FEIM
for fees and expenses waived or reimbursed for the class provided
that repayment does not cause annual operating expenses (after the
repayment is taken into account) to exceed either: (1) 1.00% and
0.25% of the class’s average net assets, respectively; or (2) if
applicable, the then-current expense limitations. Any such
repayment must be made within three years after the date in which
the Fund incurred the fee and/or expense. °°The Gross Expense Ratio
includes an estimate of interest payments the Fund expects to incur
in connection with its use of leverage of 1.56% and Acquired Fund
Fees and Expenses (‘‘AFFE’’), which are fees and expenses incurred
by the Fund in connection with its investments in other investment
companies, which are excluded from the expense waiver. °°°The
Adjusted Expense Ratio of 0.25% for Class I and 1.00% for Class A
excludes certain investment expenses, such as interest expense from
borrowings and repurchase agreements and dividend expense from
investments on short sales, incurred directly by the Fund or
indirectly through the Fund’s investments in underlying First Eagle
Funds (if applicable), none of which are paid to First Eagle. The
information is not intended to provide and should not be relied on
for accounting or tax advice. Any tax information presented is not
intended to constitute an analysis of all tax considerations.
The minimum initial investment for Class A Shares is $2,500 per
account. The minimum subsequent investment amount for Class A
Shares is $100. The minimum initial investment for Class I Shares
is $1 million per account. There is no minimum subsequent
investment amount for Class I Shares.
The Credit Opportunities Fund is an Interval Fund, a type of
fund that, in order to provide liquidity to shareholders, has
adopted a fundamental investment policy to make quarterly offers to
repurchase between 5% and 25% of its outstanding Common Shares at
net asset value (“NAV”). Subject to applicable law and approval of
the Board of Trustees for each quarterly repurchase offer, the Fund
currently expects to offer to repurchase 5% of the Fund’s
outstanding Common Shares at NAV on a quarterly basis.
The Credit Opportunities Fund’s Common Shares are not listed for
trading on any national securities exchange, have no trading market
and no market is expected to develop.
Investors should consider investment objectives, risks,
charges and expenses carefully before investing. The prospectus and
summary prospectus contain this and other information about the
Funds and may be obtained by visiting our website at www.feim.com
or calling us at 800.334.2143. Please read our prospectus carefully
before investing. Investments are not FDIC insured or bank
guaranteed and may lose value.
Risk Disclosures
An investment in the First Eagle Credit Opportunities Fund (the
“Fund”) involves a number of significant risks. Before you invest,
you should be aware of various risks, including those described
below. For a more complete discussion of the risks of investing in
the Fund, see the Fund’s prospectus under the heading, “Principal
Risks of the Fund.”
All investments involve the risk of loss of principal. The Fund
may not be able to pay distributions or may have to reduce
distribution levels if the income and/or dividends the Fund
receives from its investments decline.
Investment in private and middle-market companies is highly
speculative and involves a high degree of risk of credit loss, and
therefore the Fund’s securities may not be suitable for someone
with a low tolerance for risk. The Fund is required to rely on the
ability of the First Eagle Alternative Credit’s investment
professionals to obtain adequate information to evaluate the
potential returns from investing in these companies.
Below investment grade securities or comparable unrated
instruments may be subject to greater risks than securities or
instruments that have higher credit ratings, including a higher
risk of default, and the Fund might have difficulty selling them
promptly at an acceptable price.
Investments in loans potentially expose the Fund to the credit
risk of the underlying borrower, and in certain cases, of the
financial institution. The Fund’s ability to receive payments in
connection with the loan depends primarily on the financial
condition of the borrower. Even investments in secured loans
present risk, as there is no assurance that the collateral securing
the loan will be sufficient to satisfy the loan obligation. The
market for certain loans is expected to be illiquid and the Fund
may have difficulty selling them. In addition, loans often have
contractual restrictions on resale, which can delay the sale and
adversely impact the sale price.
Investments in debt securities and other obligations of
companies that are experiencing significant financial or business
distress involve a substantial degree of risk, including a material
risk that the issuer will default on the obligations or enter
bankruptcy. The level of analytical sophistication, both financial
and legal, necessary for successful investment in distressed assets
is unusually high. There is no assurance that First Eagle
Alternative Credit will correctly evaluate the value of the assets
collateralizing the Fund’s investments or the prospects for a
successful reorganization or similar action in respect of any
company.
Diversification does not guarantee investment returns and does
not eliminate the risk of loss.
The First Eagle Credit Opportunities Fund is offered by FEF
Distributors, LLC, a subsidiary of First Eagle Investment
Management, LLC. First Eagle Investment Management, LLC provides
advisory services.
FEF Distributors, LLC (“FEFD”) distributes First Eagle products;
it does not provide services to investors. As such, when FEFD
presents a strategy or product to an investor, FEFD and its
representatives do not determine whether the investment is in the
best interests of, or is suitable for, the investor. Investors
should exercise their own judgment and/or consult with a financial
professional prior to investing in any First Eagle strategy or
product.
First Eagle Investment Management is the brand name for First
Eagle Investment Management, LLC and its subsidiary investment
advisers. First Eagle Alternative Credit is the brand name for
those subsidiary investment advisers engaged in the alternative
credit business.
© 2021 First Eagle Investment Management, LLC. All rights
reserved.
1 Past performance is not indicative of future results. Class I
shares (without sales charge). Distribution yield is based on the
fund-level composite of all the share classes. Distribution yield
indicates the annual yield received if the most recent composite
Fund monthly distribution paid was the same for an entire year. The
yield represents a distribution and does not represent the total
return of the Fund. Because distribution yield is annualized from a
single month’s distribution, no investor actually received the
yield in a given year. The yield is calculated by annualizing the
most recent composite monthly distribution paid by the Fund and
dividing it by the Fund’s average month-to-date NAV from the as-of
date.
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MEDIA: Mount and Nadler Hedda Nadler
hedda@mountandnadler.com 212.759.4440
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