Why invest in trade finance?
It is estimated that around $2.5 trillion of trade finance applications are rejected by banks & financial institutions each year. Accounting for approximately 8-10% of global trade. This ‘trade finance gap’ presents an opportunity for investors to capitalise on an underserved market, make an impact and benefit from an undervalued asset class.
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Demand has increased since the 2008 financial crisis, while trade financing supply has become increasingly scarce.
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Banks are increasingly reducing their exposure, providing an opportunity for agile financial organisations to support SME trade finance requirements.
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Trade finance assets can now be accessed easily by specialist funds such as Artis.
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A trade investment directly impacts global economies and helps facilitate key trade at an important moment in commercial history.
Benefits of trade finance as an investment.
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1
Self-liquidating
Trade finance transactions ordinarily have short tenors and self-liquidate on completion.
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2
Low default rates
Trade finance instruments statistically result in lower default rates than other fixed income investments.*
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3
Uncorrelated returns
Investments provide consistent returns uncorrelated to capital markets.
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4
Secure investments
Trade finance transactions can be secured by credit insurance and other collateral.
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5
Alternative to cash
An alternative to a cash time deposit, especially in times of negative interest rates.
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6
Resilient asset class
Trade finance has proven to be resilient to geopolitical turbulence.**
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7
Portfolio diversification
A means to diversify your portfolio with an institutional-grade asset class.
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8
Impact investing
Enable global SMEs to access much needed working capital.
*Source: 2019 ICC Trade Register
**Source: Eurekahedge research
A consistent and uncorrelated investment class.
Performance of trade finance funds against comparable public benchmarks since 2009.
Eurekahedge Trade Finance Hedge Fund Index
Bloomberg Barclays Global-Aggregate TR Index
Eurekahedge Fixed Income Hedge Fund Index
Merrill Lynch US High Yield Master II Index
Investments that make an impact.
Access to working capital and trade finance for SMEs has never been so restricted. Compounded by the impact of the pandemic, businesses are struggling to finance their deals, in turn jeopardising jobs and global supply chains.
With an investment in Artis you have a direct impact on national economies and facilitate critical trade.
- Support SMEs and global economies.
- Facilitates national and cross-border trade.
Insights
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