Asset-Based Lending Fund — Manulife John Hancock Investments

John Hancock Asset-Based Lending Fund

What is asset-based lending?
Characteristics of asset-based lending
Our portfolio
Key documents
About Marathon Asset Management

What is asset-based lending?

Asset-based lending is a sector of private credit that comprises loans backed by hard and financial assets. Private credit has existed in institutional markets for decades and is gaining traction among private investors looking to complement existing portfolios with alternative yield sources, potential differentiated returns, and through-cycle investment strategies.

What’s behind the rise of private credit?

A number of factors are driving the rise in private credit, which has grown to a market size of around $1.5 trillion, more than triple what it was a decade earlier.¹

Potential for differentiated yields compared with traditional fixed income

Helps to mitigate interest-rate risk—private loans are predominantly floating rate, reducing risks for investors of higher future interest rates and diminishing returns

Potential inflation protection through an asset offering the potential for differentiated yields with a shorter duration than long-term bonds

Overall growth in non-bank lenders globally since the global financial crisis, which is driving greater sophistication and customization in asset-based lending

Important disclosures

1 Preqin, as of December 2022. Most recent data available.

Characteristics of asset-based lending

Understanding the investment opportunity

Asset based

Asset-based lending investments are loans secured by hard or financial assets

Differentiated returns

Complexity and liquidity premium potential due to sourcing, underwriting, and originating private loans

Contractual cash flows

Asset-based lending has contractual cash flows, which have the potential for a stable cash flow stream and potential high current income

Structural security

Deals typically include protective loan covenants and ownership of collateral that aim to protect investors

Investing with Manulife John Hancock Investments

John Hancock Asset-Based Lending Fund offers investors:

Alpha generation through sourcing, less efficient markets, limited competition, complexity and illiquidity premiums, and proprietary manager insight

The potential for high current income through stable, contractual cash flows

Access to an all-weather strategy that aims to perform through credit cycles

Access to diverse private credit strategies through an experienced manager with specialized expertise

Liquid securitized credit to complement private loans and provide sources of liquidity

A focus on downside risk through originated loans secured by real or financial assets

A high-quality, diversified portfolio across various private credit market subsectors

Diversification within private markets is critical for success and requires both depth of expertise and well-established relationships to help secure the most attractive opportunities.

John Hancock Asset-Based Lending Fund invests in sectors that have been identified for their long-term return potential and ability to perform at varying points within a credit cycle with the aim of providing an all-weather approach to private credit.

Dynamic portfolio allocation

Marathon Asset Management has deployed over $20 billion across multiple asset-based lending sectors since the early 2000s, following an approach that offers:

Flexible asset allocation that adapts to changing economic environments
Provides clients with attractive portfolio diversification through exposure to a broader private credit opportunity set and diversified pools of hard and financial assets with varying borrower profiles
A focus on areas of the specialty finance and asset-based market where Marathon has specialized teams and expertise
Seeks to opportunistically identify mispriced assets and funding gaps in areas of the market that are underserved by traditional lenders
Specialty financings sourced through nontraditional niche channels

Portfolio composition

Fund's strategy	Active investor since (Marathon Asset Management)²	Target sector allocations	Fund strategy overview
Healthcare loans and royalties	2006	10%–25%	Healthcare loans secured by revenue, intellectual property rights, and royalty streams on primarily FDA-approved drugs and devices
Transportation loans and leases	2005	10%–25%	Transportation assets such as loans and leases backed by commercial aircraft and shipping vessels
Residential mortgage loans	2002	10%–25%	The origination and acquisition of residential real estate loans, legacy mortgage loan pools, and newly originated nonagency mortgage loans
Commercial real estate loans	2003	10%–25%	The origination and acquisition of commercial real estate loans secured by housing-related and traditional commercial real estate property types
Consumer loans	2002	10%–25%	Acquisition of consumer loans, including distressed loans, and high-yield asset-backed securities (ABS) backed by various forms of non-mortgage household debt largely focused on select market segments such as automobile loans and leases, credit cards, and personal installment loans
Corporate asset-based lending	2002	0%–10%	Asset-based corporate credit secured by real estate, equipment, receivables, inventory and intellectual property rights, among other assets
Liquid securitized credit	2003	At least 10%	Securities backed by residential real estate, commercial real estate, collateralized mortgage obligations, secured corporate loans, and ABS

Fund terms

Structure	This fund is a continuously offered unlisted closed-end tender offer fund registered under the Securities Act of 1933 and Investment Company Act of 1940
Investment objective	To seek high current income as a primary objective; secondary objective is capital appreciation
Subscription frequency	Monthly
NAV frequency	Monthly
Redemption policy	The fund expects to have quarterly tenders of up to 5.00% of shares outstanding, subject to board approval³
Distributions	Quarterly
Tax reporting	1099
Investor qualifications	Accredited investors
Management fee	1.35% on managed assets
Incentive fee	12.50% over a 5.00% hurdle on pre-incentive fee net investment income subject to a catch-up feature⁴

Important disclosures

2 Denotes Marathon Asset Management's active years of investment in each sector. 3 Commencing two years from inception. 4 No incentive fee is currently charged pursuant to a waiver, which was initially approved for the first year of operations and renewed for an additional six months, through 1/31/24.

Share classes

	Class I	Class D	Class S
Availability	Through fee-based (wrap) programs, registered investment advisers, and other institutional and fiduciary accounts	Through fee-based (wrap) programs, registered investment advisers, and other institutional and fiduciary accounts	Through transactional/brokerage accounts
Initial and subsequent investment minimums	$1,000,000/$100,000⁵	$10,000/$5,000	$10,000/$5,000
Up-front fee (commission)	None	Up to 1.5%	Up to 3.5%
Distribution/servicing fee	None	0.25%	0.85%

Important disclosures

Minimum investment amounts may be reduced or waived by the fund at its sole discretion. All shares repurchased less than one year after the date of purchase are subject to a 2% early repurchase fee regardless of share class. Any sales load will reduce the amount of an investor's initial or subsequent investment in the fund and will not form part of an investor's investment in the fund. The sales load may be waived in certain circumstances at the advisor's discretion. Please see the fund's prospectus for more information. 5 Class I minimums may be reduced to $10,000 for certain investors.

Understanding the asset-based lending market opportunity

Private asset-based lending is one of the fastest-growing segments of private credit. Investors looking to complement existing public debt and private credit allocations can benefit from the potential asset-based lending offers for alternative yield sources, differentiated return drivers, and through-cycle investment strategies. Find out more about the investment opportunities in asset-based lending.

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Key documents

Term sheet/brochure

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Prospectus

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Transfer form

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SAI

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Presentation

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Investor application

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Additional investment form

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Maintenance form

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About Marathon Asset Management

Marathon Asset Management was established more than 25 years ago and has over $21 billion in AUM,⁶ with a focus on private credit. Consisting of a global team of 177 professionals located in offices in London, Los Angeles, Luxembourg, Miami, New York, and Tokyo, the team is experienced and dedicated to managing capital in a prudent and productive manner that seeks attractive risk-adjusted returns while having a keen focus on alignment of interest with investors. Marathon’s private credit business spans direct lending and asset-based lending, and includes expertise in healthcare and aircraft leasing along with real estate lending. Manulife John Hancock Investments appointed Marathon Asset Management as manager of the fund for the team’s significant global experience of investing through multiple credit cycles. The team is fully integrated, which enables it to capitalize on credit opportunities globally, and possesses a differentiated, broad-based skill set and proprietary platform to research, analyze, and act on complex capital structures and situations.

Important disclosures

6 Assets under management (AUM) are as of 12/31/22 and include undrawn commitments netted for investments in affiliated vehicles. Represents total assets managed for the fund, including leverage provided by the fund’s financing provider.

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Louis is the chief investment officer, a co-managing partner, and a member of Marathon’s investment committees and executive committee. Louis oversees Marathon's portfolio managers and their investment activities. His responsibilities also include managing risk on a firm-wide basis, as well as serving as senior portfolio manager for the firm's multi-strategy credit investment funds and separate accounts. He has extensive trading experience and expertise as an asset manager, arbitrageur, and risk manager in both the equity and fixed-income markets on a global basis. Prior to co-founding Marathon in 1998, he was a managing director at Smith Barney, where he was responsible for all trading and risk management in the global emerging markets debt trading division. Earlier, he was a director of the global emerging markets debt and foreign exchange derivatives trading division at Merrill Lynch. In 1991, he pioneered the use of warrants on a basket of Latin American equities at Nomura Securities. Louis previously traded European sovereign debt futures at First Chicago Capital Markets and was a floor trader at the Chicago Board of Trade. He received a B.A. in Economic History from the University of Chicago and an M.B.A. from the Graduate School of Business at the University of Chicago.

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Andrew is a partner, head of Marathon’s structured credit group, and a member of Marathon’s executive and investment committees. Andrew is responsible for the principal investment decisions of Marathon’s structured credit business. Prior to Marathon, he worked at Guggenheim Capital Markets, where he established a trading and advisory business focused on credit sensitive situations relating to structured finance and hard assets in real estate related markets. Previous to that, Andrew worked in a similar capacity at Marathon Asset Management. He also worked at Smith Barney, where he was head of CMBS trading and securitization. Andrew began his career at Donaldson Lufkin & Jenrette, in the real estate finance group. He holds a B.A. in Economics from the State University of New York, Binghamton University.

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Edward is a partner and managing director in Marathon's structured credit group and a member of the executive committees, investment committee, and diversity and inclusion council. Edward is responsible for portfolio construction, asset allocation and overall fund strategy for Marathon’s long-only, high-yield, and private asset-based investment strategies. He is currently a portfolio manager for asset-based lending and structured finance investments in Marathon investment vehicles, including separate accounts. Edward joined Marathon from Citigroup Corporate Investment Banking, where he specialized in asset-backed debt financings in the firm’s financial institutions group. Previously, he worked as a quantitative researcher at Morgan Stanley Capital International. Edward holds a B.S. in Operations Research and Financial Engineering from Princeton University.

Related viewpoints

Asset-based lending market opportunity: wide open with potential yield

Edward Cong, Partner, Portfolio Manager

At an estimated $3 trillion¹ globally, the opportunity in asset-based lending is impossible to ignore, and today it belongs to non-bank lenders. Private asset-based lending is critical to the global economy, financing assets such as aircraft, FDA-approved therapeutics, cars, real estate, and many types of equipment. Higher yields, wider spreads, and conservative deal structures present an attractive entry point for those seeking exposure to the credit market’s best-kept secret.

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What is asset-based lending?

The expansion of private credit since 2008 has led to increased demand for diversifying income strategies from investors and customized solutions from borrowers. Against this backdrop, asset-based lending has emerged as the fastest-growing segment of private credit, able to deliver a differentiated source of income. It does this through exposure to a wide range of underlying assets that have the potential to generate predictable cash flows, quality income, and diversify investors’ risk premia exposure. We explore asset-based lending in this article.

Important disclosures

Fund shares are illiquid and, therefore, an investment in the fund should be considered a speculative investment that entails substantial risks. Investors could lose all or substantially all of their investment. Shares of the fund are not listed on any securities exchange, and it is not anticipated that a secondary market for the fund’s shares will develop; therefore, an investment in the fund may not be suitable for investors who may need the money they invest in a specified timeframe. The amount of distributions that the fund may pay, if any, is uncertain. Annual distributions may consist of all or part of your original investment, and therefore may not consist of a return of net investment income. The fund’s use of leverage may not be successful and may create additional risks, including the risk of magnified return volatility and the potential for unlimited loss. Exposure to investments in commercial real estate, residential real estate, transportation, healthcare loans, and royalty-backed credit and other asset-based lending, including distressed loans, may also subject the fund to greater volatility than investments in traditional securities. Investments in distressed loans are subject to the risks associated with below-investment-grade securities. In addition, when a fund focuses its investments in certain sectors of the economy, its performance may be driven largely by sector performance and could fluctuate more widely than if the fund were invested more evenly across sectors. The fund’s investment strategy may not produce the intended results. Please see the fund’s prospectus for additional risks.

Request a prospectus from your financial professional, by visiting jhinvestments.com, or by calling us at 800-225-5291. The prospectus includes investment objectives, risks, fees, expenses, and other information that you should consider carefully before investing.

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John Hancock Asset-Based Lending Fund

What is asset-based lending?

What’s behind the rise of private credit?

Potential for differentiated yields compared with traditional fixed income

Helps to mitigate interest-rate risk—private loans are predominantly floating rate, reducing risks for investors of higher future interest rates and diminishing returns

Potential inflation protection through an asset offering the potential for differentiated yields with a shorter duration than long-term bonds

Overall growth in non-bank lenders globally since the global financial crisis, which is driving greater sophistication and customization in asset-based lending

Characteristics of asset-based lending

Asset based

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