Investors are increasingly turning to investments in bonds and private debt, drawn by attractive annual returns that can reach 10% or more. According to Ignas Šablevičius, fund manager of Capitalica Debt Fund, managed by Capitalica Asset Management, the fund aims to generate a 10% return for its investors. So far, after the first six months of operation, the fund has achieved an annual return of nearly 8%, with steady monthly growth since its launch. The fund also plans to distribute a portion of its earnings to investors annually, generating a passive income stream of up to 5% in annual interest payments.
This investment tool is suitable for those seeking to diversify risk, generate stable returns, and receive periodic interest payments, the fund manager explains.
„The asset class of bonds and private debt remains attractive to investors. Its relative stability and ability to generate regular income make it a strong complement to other asset classes. Seeing the ongoing financing gap for businesses in our region and investors’ growing appetite for this asset class, we launched a debt fund earlier this year. Until now, the minimum investment amount was 125,000 Eur. We have received investments from both individuals and legal entities. However, we have also noticed a demand for smaller investment amounts. To meet this need, we have lowered the minimum investment threshold to 25,000 Eur. I believe this decision **makes it easier for investors to put their funds to work in the capital market,“ explains Ignas Šablevičius, fund manager at Capitalica Debt Fund.
According to Šablevičius, this adjustment will be most beneficial for investors who are either new to investing or experienced but unable to allocate the previously required 125,000 Eur. per investment due to their chosen strategy or other factors.
However, he also emphasizes that this opportunity is temporary. Under the current decision of the fund management company, the lower investment threshold will be available only until spring 2025. Additionally, all investors will need to undergo an evaluation to determine whether the investment is suitable for them.
A Truly Diversified Portfolio
Investments in bonds and private debt are typically chosen by those seeking stable returns with lower volatility, notes Šablevičius.
He highlights that not all securities Capitalica Debt Fund invests in are accessible to private investors. Some are unavailable due to minimum investment requirements, restricted issuance to professional investors, or because they are private, off-market transactions that most investors never see.
Additionally, portfolio construction and management require experience, expertise, and time, which is handled by dedicated Capitalica Asset Management professionals. The process involves considering the investor’s lending strategy and risk appetite, as well as conducting financial and non-financial due diligence on target investments, including discussions with company management. Capitalica Debt Fund diversifies its investments across various industries, sectors, and regions, further reducing individual investment risk and ensuring stable returns.
And thirdly – to build a truly diversified portfolio that minimizes individual company risk, substantial capital is required, typically measured in millions of euros. By investing in Capitalica Debt Fund, investors gain instant access to this level of diversification. The fund primarily focuses on bonds issued by small and medium-sized enterprises (SMEs) in the Baltic states and Poland.
„These are the three key factors that lead potential investors to say, ‘Yes, we want to invest,’ rather than trying to build their own portfolio by selecting individual bonds,“ summarizes Šablevičius, who has nearly 20 years of banking experience working with business clients.
