In Depth

We Asked Investment Pros Their Best Ideas

Dec 29 2014 | 5:40am ET

Brendan Ross
Portfolio Manager, Direct Lending Investments
Twitter: @brendan_ross

What was your best investment idea in 2014?

Small business loans. Thanks to a decline in bank lending to small businesses, these borrowers significantly overpay for credit, delivering high current yield and strong downside protection. We grew from $20 to $100 million this year on the strength of double-digit, unlevered returns from this slice of fixed income.

What are you bullish on for 2015?

Adding niche receivables to the portfolio. While my duration is already under one year, receivables have a duration measured in months. In many cases, you get lockboxing, so that repayment comes from the invoice recipient, which is typically a larger business than the actual borrower. Banks have never been able to effectively finance receivables for smaller businesses, so this is an attractive niche and a perfect addition to the Direct Lending Income Fund.

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