innovation in fixed income 2020
TRANSCRIPT
A product of:
INNOVATION IN FIXED INCOME 2020
* This presentation is for informational purposes only, so those interested should read the fund's information memorandum
** American citizens / residents may not participate in this fund
The excess of liquidity in global markets and low interest rates, as a product of a decade of monetary
expansion programs of the main central banks, has caused that the prices of most of the assets have
increased significantly, and that the yields of the fixed income sector have contracted
Under the uncertainty that surrounds possible rises in interest rates and a recession in the upcoming
years, it is important to migrate towards low volatility investments with low correlation with the market,
such as alternative investments, particularly the type of Asset Backed Lending
AV Financial Group has more than ten years of experience in the loan market with guarantees and
alternative investments. Since the creation of the AV Alternative Fund in January 2019, three years
have passed through which the group formalized its credit strategy with real guarantees in Latin
America and the US. This fund represents the second series of the AV Alternative Fund, whose
strategy and terms are similar to the previous one
ABOUT THE FUND
Current Situation
9% - 12%Annual expected
return
Low correlation
with the market
Years of experience
10
Regulatory restrictions create opportunities for private investors
The Latin American market is underserved by traditional sources of loans, due to the strict
conditions and regulations of the banking system for granting loans to companies
The decrease in the supply of capital from this sources is replaced by alternative financing that
has become a solution for companies seeking flexible financing.
Developing relationships with local counterparts has generated opportunities to participate in
these markets
The world of stocks and bonds offers profitable opportunities, however, the market is very
volatile
The team seeks investment opportunities with above-average returns and mitigated
risks
It is designed to generate low volatility and uncorrelated returns, focusing on capital preservation
and eliminating the risk of market prices in fixed income markets
Distributions expected above 10%, with short-term investments (between 1 and 3 years
approximately) that are mildly affected by changes in interest rates
Loans with better ranking (senior) in the capital structure ensures priority in payment
It is designed to be over collateralized seeking for protection through the borrower´s
commitment with collateral or double guarantees that are easily executed in case of default
Collateralized Loans
Mezzanine Debt
High Yield Debt
Aggregate Index
Bonds
US Treasury Bills
Cash
10+%
7-10%
5-7%
3-5%
0-3%
Expected Return
ABOUT THE FUND
Current Situation
The fund has the ability to structure loans in the Latin American and US market
Closed-end fund
Loans with collateral or double collaterals that are easy to execute in case of default
Semi-anual payment distributions
Its purpose is to originate transactions with 9-12% IRR
It has a fund manager and independent external auditors
Lines of credit operations with 1 to 3 years of average life with amortizations of capital and
interest
ABOUT THE FUND
Investment Strategy
Certificates of Tax
Refund
Commercial
Accounts ReceivablePayroll DiscountsInventories
Collateral or Guarantees
ABOUT THE FUND
Fund Composition
Distribution by Sector
The team has sought different investment alternatives in
the market, currently the portfolio is diversified in the
following sectors:
Distribution by Country
The aim is to diversify country risk by looking for
alternatives in different markets. The loan portfolio has
investments in the following countries:
For information purposes, based on the first series of the AV Alternative Fund, it would be expected that
the geographical and sectorial distribution of this fund comply with a similar diversification to the following:
Country
PER
COL
ECU
USA
CR
MEX
PANNon-bank financials
Real Estate
Services
Hard Money Lending
Construction
Fishing
Energy
Healthcare
Media
Commodities
Manufacturing
Transportation
0% 5% 10% 15% 20% 25% 30% 35% 40%
Sector
Team
o The fund has the infrastructure and support of AV Financial
Group, a company dedicated to Latin American markets
with 60 employees among its offices in the region
o The fund's strategy has 10 people with direct
responsibilities between Miami, Caracas, Panama, San
José, Guayaquil and Lima, as well as the support of the
rest of the AV Financial Group team
Panamá
San José
Caracas
Lima
Miami
10
Guayaquil
AV ALTERNATIVE FUND
Return vs Asset Classes
Since 2014, prior to the creation of AVAF I and AVAF II, the AV Financial Group team has managed a closed private investment fund with
similar characteristics to this fund. The following table shows the returns of the original fund, as well as the performance of the AVAF I:
* Includes administration fee. Does not include performance fee
* Past performance is not indicative of future performance
AVAF EMBI S&P500 MSCI
Jun-14 1,000 1,000 1,000 1,000
Jul-20 1,797 977 1,701 1,017
Acummulated Return 79,7% -2,3% 70,1% 1,7%
AVAF EMBI S&P500 MSCI
Annualized Return 10.0% -0,4% 9,0% 0,3%
Standard Deviation 1,7% 8,5% 13,9% 17,4%
600
800
1.000
1.200
1.400
1.600
1.800
2.000
Jun-1
4
Aug-1
4
Oct-
14
De
c-1
4
Feb
-15
Apr-
15
Jun-1
5
Aug-1
5
Oct-
15
De
c-1
5
Feb
-16
Apr-
16
Jun-1
6
Aug-1
6
Oct-
16
De
c-1
6
Feb
-17
Apr-
17
Jun-1
7
Aug-1
7
Oct-
17
De
c-1
7
Feb
-18
Apr-
18
Jun-1
8
Aug-1
8
Oct-
18
De
c-1
8
Fe
b-1
9
Apr-
19
Jun-1
9
Aug-1
9
Oct-
19
De
c-1
9
Feb
-20
Apr-
20
Jun-2
0
AVAF EMBI S&P 500 MSCI
1,797
1,701
9771,017
• Special advisers
• Stock exchanges
• Bankers
• Lawyers
• Accountants
Origination
• Collateral analysis
• Cash flows
• Collateral stress test
• Credit Reports
Audit
• Capital Structure
• Management
Review
• Operating and
finacial control
• Legal and regulatory
review
• Character of the
debtor
Due Diligence
• Equipment review
and approval
• Contact with
external lawyers
• Establishment of
cash controls
• Collateral
registration
Execution
• Accounts
reconciliation
• Cash basis
calculations
• Collateral tracking
Risk Management
ABOUT THE FUND
Investment Process
Frequent analysis of the
political and economic
situation in the region
Macroeconomic
Situation
Most credits are made in USD
Exchange Risk
Periodic request for financial
information from the Borrower
Risk of Breach
Control and monitoring by our
local partners
Default Risk
Valuations prepared by the
internal team and the
independent administrator
Valuation Risk
Real liquid guarantees
Illiquidity of the
market
ABOUT THE FUND
Risk Factors
ABOUT THE FUND
Fund Terms
Minimum Contribution USD 150K
Manager AV Asset Management
Distributions Semiannual based on the performance of the loans
Investment Period 36 months
Raising Capital Period 18 months from launch (March 2018)
Leverage Up to 50% of assets
Management Fee 2.25%
Reinvestment of Capital Allowed during investment period
Administrator JTC Group
Legal representatives Harney Westwood & Riegels (BVI)
Sales Agent AV Securities, Inc.
LEGAL
Disclaimer of Responsability
You are solely responsible for doing the due diligence with respect to any investment fund. You can do it in the way that you consider most appropriate,
including the possibility of consulting with your own legal and tax advisors. The information provided by AV Securities, Inc. should not be the basis for
your investment decision.
This material is based on information that AV Securities, Inc. considers reliable. However, AV Securities, Inc. can not ensure that the information
contained in this material is accurate, complete or up-to-date. AV Securities, Inc. is not responsible for updating the information contained in this
material. This material is for informational purposes only. The returns achieved in the past are not guarantees of future results.
Alternative investment funds are not appropriate for any investor. They can be speculative and constitute a higher level of risk than those associated
with investments in traditional assets. The investor may lose a significant or total portion of their investment. Investors should consider an investment of
this type as a complement to their overall investment strategy.
Alternative investment funds are not mutual funds and are not subject to the same regulations or controls. Investments in alternative investment funds
are not guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Alternative investment funds can use leverage and other speculative practices that can increase the risk of losses in the capital invested. The
performance of alternative investment funds can be volatile and may contain illiquid investments.
There is no secondary market for these investments and one is not expected to develop. There may be restrictions when redeeming the position within
the fund.
The fees charged by the fund can erode the profits generated.
The fund manager has full authority over it and investment decisions are at your discretion.
Alternative investment funds can involve complex fiscal strategies and there may be delays in distributing the fiscal information regarding the fund to
investors.
Some alternative investment funds may execute purchases of assets denominated in currencies other than the US dollar. Monitoring of the fund and its
investments is carried out continuously
Torre de Las Américas, Torre C, Piso 19, Oficina 1903
Punta Pacífica, República de Panamá
Office Phone 1: + (507) 215 10 32
Office Phone 2: + (507) 215 10 11
Address
Contact Info
Telephone
Contact Us