John Hancock has launched a new unlisted closed end fund: John Hancock GA Senior Loan Trust. The fund is offering its shares via a private placement, with John Hancock Distributors, LLC serving as the distributor. This new fund follows the successful launch of John Hancock GA Mortgage Trust in 2019. The Mortgage Trust has $1.5 billion in net assets, making it one of the largest tender offer funds currently in the market. In this post we review the key information from the offering documents available on the SEC website.
John Hancock Senior Loan Investment Strategy
John Hancock GA Senior Loan Trust has one objective: to generate current income. The fund expects to pay distributions at least semi annually.
The Senior Loan Trust, has a mandate to invest in a broad range of senior loans, including first and second lien term loans, delayed draw term loans, and revolving credit facilities. The fund also may make equity co-investments in conjunction with lending transactions. Typically these equity co-investments will be small positions in the direct or indirect parent company of borrowers. The fund will focus exclusively on below investment grade loans, as determined at the time of purchase. Maturity dates may be up to nine years, and the fund will employ a buy and hold strategy, rather than actively trading securities. Unlike the Mortgage Trust, the Senior Loan Trust will generally not invest in loans backed by property, although in some cases mortgages might be part of a bigger collateral package.
John Hancock GA Senior Loan Trust does not plan to use any leverage on the portfolio, but it will borrow for short term liquidity purposes. The fund plans to provide periodic liquidity, although the board has discretion to change or suspend the repurchases.
Share Classes and Fees
The offering documents do not mention any sales commission. However, the first year expenses for the fund are expected to include 0.32% in organization and offering fees. The fund charges a base management fee equal to 0.55% of annual net assets, in addition to a performance fee equal to 10% of net profits, subject to a high water market.
How do the fees charged by John Hancock GA Senior Loan Trust compare to other unlisted closed end funds? We recently published a whitepaper on fee structures in the unlisted closed end fund space. To access this whitepaper, sign up for a Premium Membership.
John Hancock and Manulife
Manulife Investment Management Private Markets (US) LLC serves as the fund’s adviser. Manulife is the parent company of John Hancock. According to John Hancock’s website, the firm follows a multi manager approach combining in house analysts and portfolio managers with a network of specialized asset managers. Managers in John Hancock’s network include Axiom Investors, Bain Capital, Boston Partners, Pzena Investment Management, T. Rowe Price, Wellington Management, among others. John Hancock has a total AUM of $164 billion.
To learn more about John Hancock’s unlisted closed end funds, as well as other investment strategies in this niche, please visit our Active Funds Page.