NEW YORK–(BUSINESS WIRE)–First Eagle Investments (“First Eagle”) announced today that the total assets under management of First Eagle Credit Opportunities Fund (A Share Class: FECAX; I Share Class: FECRX) exceeded the US$350 million threshold in approximately 18 months has exceeded since its launch. The fund aims to provide current income with a focus on delivering attractive risk-adjusted returns over the long term through a multi-sector portfolio that invests primarily in private and public alternative credit assets. As of December 31, 2021, the Fund’s distribution yield was 7.09%.*
“We are pleased with the broad interest in the Credit Opportunities Fund from retail finance professionals and their clients,” said Jack Snyder, Jr., national sales manager, Wirehouse and RIA Channel and head of retail alternative investments at First Eagle. “As traditional fixed income investments continue to offer low returns but high risks in a rising interest rate environment, alternative credit investments may represent an attractive option for those seeking income. The structure of the Credit Opportunities Fund – complemented with education and training specifically tailored for financial professionals – allows us to offer an institutional quality solution in the retail channel and we are pleased with the demand observed.”
As a closed-end interval fund registered under the Investment Company Act, 1940, as amended, the Credit Opportunities Fund provides investors with quarterly liquidity while allowing portfolio managers greater flexibility to invest in alternative income-generating assets such as personal loans and syndicated loans that have in historically offered higher yields compared to traditional securities in exchange for lower liquidity. At the same time, like an open-ended mutual fund, the fund is continuously offered for sale at NAV and is available to a wide audience without the need for accredited or qualified investors.
“We appreciate the support of our early investors in the Credit Opportunities Fund,” said Chris Flynn, President of First Eagle Alternative Credit. “As the investment environment generally becomes more complicated, we expect that thorough credit research and prudent asset selection will be key to success in the alternative credit space. We are pleased to leverage our team’s extensive market experience to offer this ‘core’ alternative lending strategy to retail investors and their finance professionals as they consider the role such assets can play in a traditional allocation.”
* The Fund intends to declare dividends daily and pay them monthly at rates that aim to maintain a more stable level of dividends than would be the case if it were to solely distribute amounts based on its current net investment income. This is managed by paying out less than all of the net investment income or undistributed income from previous months, with any potential remaining shortfall flagged as a return of capital at year-end. To date, the distribution yield has only been derived from the fund’s net investment income and has not included any leverage or a return of capital. Distributions may not be made in equal amounts and one month’s distribution may be larger than another. The distribution yield shown excludes special dividends, is based on the composition of all share classes at fund level and represents the annual yield achieved if the compound fund’s last paid monthly distribution was the same for a full year. The return represents a distribution and not the total return of the fund. Because the distribution yield from a single month’s distribution is annualized, no investor actually received the yield in any given year. The return is calculated by taking the last compound monthly distribution paid by the fund on an annualized basis and dividing it by the average net asset value of the fund since the beginning of the current month.
About First Eagle Investments
First Eagle Investments is a privately held, independent investment manager headquartered in New York with approximately $110.5 billion in assets under management as of December 31, 2021. Dedicated to the prudent management of clients’ wealth, the firm focuses on active, fundamental and agnostic investing with a strong emphasis on loss mitigation. With a heritage dating back to 1864, First Eagle has helped clients avoid permanent capital depreciation and achieve attractive returns through widely differing economic cycles – a tradition that is at the heart of its mission today. The firm’s investment opportunities include equity, fixed income, alternative credit and multi-asset strategies. For more information on First Eagle, visit www.firsteagle.com. For information on First Eagle’s Alternative Lending team, visit www.feac.com.
The Credit Opportunities Fund (the “Fund”) is a closed-ended interval fund, a type of fund which, in order to provide liquidity to shareholders, follows a basic investment policy of making quarterly buyback offers between 5% and 25%. its outstanding common shares at net asset value (“NAV”). Subject to applicable law and the approval of the Board of Trustees for each quarterly repurchase offer, the Fund currently expects to offer quarterly repurchase of 5% of the Fund’s outstanding common shares at NAV.
An investment in the Fund is not suitable for investors who need certainty as to their ability to have all monies at their disposal in the short term.
Investors should consider Common Shares of the Fund as an illiquid investment. There is no guarantee that investors will be able to sell the Common Shares at any particular time or in the quantity that the investor desires.
The Fund’s common stock is not listed for trading on any national stock exchange, has no trading market and is not expected to develop a market.
An investment in the Fund involves a number of significant risks. Before investing, you should be aware of various risks, including those outlined below. For a more complete discussion of the risks of investing in the Fund please refer to the Fund’s prospectus under the heading “Principal Risks of the Fund”.
All investments involve risk of loss of capital. The Fund may be unable to pay distributions or may have to reduce the level of distributions if the income and/or dividends received by the Fund from its investments decrease.
Investments in private and mid-market companies are highly speculative and involve a high degree of credit loss risk, therefore the Fund’s securities may not be appropriate for those with a low tolerance for risk. The Fund must rely on the ability of First Eagle Alternative Credit’s investment professionals to obtain appropriate information in order to evaluate the potential returns from investing in these companies.
Below investment grade securities or similar unrated instruments may be subject to greater risks than higher credit rated securities or instruments, including a greater risk of default, and the Fund may have difficulty selling them promptly at an acceptable price.
Investing in loans potentially exposes the Fund to the credit risk of the underlying borrower and in certain cases the financial institution. The Fund’s ability to receive payments related to the loan depends primarily on the financial condition of the borrower. Investing in secured loans also involves risk, as there is no guarantee that the collateral securing the loan will be sufficient to meet the loan obligation. It is expected that the market for certain loans will be illiquid and the Fund may have difficulty selling them. In addition, loans are often subject to contractual restrictions on resale, which can delay sales and adversely affect the sale price.
Investing in debt and other obligations of companies that are experiencing significant financial or business difficulties involves significant risk, including a significant risk that the issuer will default on its obligations or become bankrupt. The level of analytical sophistication, both financial and legal, required to successfully invest in distressed assets is unusually high. There can be no assurance that First Eagle Alternative Credit will accurately assess the value of the assets backing the Fund’s investments or the prospects for a successful reorganization or similar action in relation to any company.
The opinions expressed are not necessarily those of the company and are subject to change based on market and other conditions. These materials are provided for informational purposes only. These opinions are not intended as a forecast of future events, a guarantee of future results, or investment advice. All statistics contained herein are from sources believed to be reliable, but the accuracy of this information is not guaranteed. Views expressed herein are subject to change at any time after the issue date. The information provided should not be construed as a recommendation or an offer to buy or sell, or a solicitation of an offer to buy or sell, any securities. The information in this article is not intended as accounting, legal or tax advice and should not be relied upon.
FEF Distributors, LLC (“FEFD”) distributes First Eagle products; it does not provide any services to investors. Therefore, when FEFD is presenting a strategy or product to an investor, FEFD and its agents do not determine whether the investment is in the investor’s best interests or appropriate. Investors should exercise their own judgment and/or consult a financial professional before investing in any First Eagle strategy or product.
First Eagle Investments is the brand name of First Eagle Investment Management, LLC and its investment advisors. First Eagle Alternative Credit is the brand name for the junior investment advisors engaged in the alternative lending business.
Investors should carefully consider investment objectives, risks, fees and expenses before investing. The prospectus and summary prospectus contain this and other information about the Funds and are available on our website at www.firsteagle.com or call us at 800.334.2143. Please read our prospectus carefully before investing. Investments are not FDIC insured or bank guaranteed and may decline in value.
First Eagle Credit Opportunities Fund is offered by FEF Distributors, LLC, a subsidiary of First Eagle Investment Management, LLC that provides advisory services.
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