Milestones Capital (MC) was established in 2014 as a systematic quantitative fund. We changed the investment objective in late 2016 to an actively managed, long term credit strategy.
We wish to provide shareholders with stable and growing income returns and to increase the capital value of our investment portfolio.
Our income is derived via investing in primary European and secondary US floating rate senior secured loans, either directly or indirectly via CLO Equity tranches. CLO Equity securities bear first loss risk and receive the residual cash after the CLO debt tranches have been paid. Senior secured loans are debt obligations made by banks to sub-investment grade corporations, syndicated and sold to investors. Senior in the capital structure and secured by the corporation's assets, the investor earns the spread over the base rate.
We invest in the CLO primary market in the warehousing phase as well as in the secondary market. We aim to have cash reserves placed in liquid credit bonds, alternatively we have the option to ask out investors to to inject more capital to take advantage of market fluctuations.
Our investment case is based on the fact that syndicated loans are an attractive access route to exposure to the senior credit risk of predominantly sponsor-backed private companies. These loans have floating-rate coupons.
CLOs are managed structures that use term-matched financing to leverage the return from a portfolio of widely-syndicated loans. These structures demonstrated their resilience in the last financial crisis.
The introduction of risk retention rules for CLO issuer, in both Europe and the US, has created a need for originators to retain exposure to the transactions. In response, the two founders of MC are also investors in MC.
MC have a low entrance fee (1%), low ongoing annual management fee of 1% of NAV combined with a performance fee of 20% over 7% per annum hurdle.
Around 90% of MSC assets are invested in senior secured loans, with the balance in CLO Equity, well diversified by CLO Manager. All loans are based on floating interest.
We believe that the above described investment strategy will give the investor the best risk adjusted return over time, compared to other assets classes such as equity, commodities, currencies etc.
We have since 2017 succeeded in reaching our target return at 9-11 % in annual return.
Our client base is private individual and family houses classified as professional investors located primarily in Denmark and Sweden.
Milestones Capital are under the supervision of the Danish FSA.