About Faes & Co
We are an investment firm focused on providing investors with consistent, stable, asset-backed returns. Our Faes & Co Income Fund invests in real estate bridging loans secured by first mortgages against residential property across the US. Our group company, F2 Finance, is a technology-enabled bridging lender that originates loans for the Fund.

Hi there,

We’ve had a busy couple of months meeting with investors - and we always enjoy getting a feel for the sentiment in the market and hearing different perspectives on the hot issues of the day. In the last few months, we have attended investor-focused events in Los Angeles, London, Texas, and Newport Beach, and all the talk seemed to about interest rates, the upcoming election, and ‘private credit’.

We have also recently published a paper on Private Credit and the Opportunity in Real Estate Bridging Finance. If you’re interested in learning more about the market opportunity, which is a market that we have a very deep domain expertise around, please do take a read and share with your colleagues and friends.

                                   The link to the paper is here.

As always, if you would like more information on our Fund, or to talk more about the market that we are actively lending in, please do not hesitate to contact us at any time.

📝 Key Takeaways (from our recent investor discussions and events)

Fed cuts interest rates (and so are we):

On September 24, the US Fed made its first interest rate cut in four years, slashing the target rate by 50 basis points to 4.75-5%. This was obviously something that has been well signaled to the market and wasn’t necessarily a surprise, but it has definitely focused investor’s minds on where interest rates are now going, and where they may stabilize next. We are seeing this on both the investor side of our firm, and also on the borrower side, with some property investors now looking to come off the sidelines and be more active in the market. It seems that there is some increased confidence that we are now finally at the back end of rates increasing - although the focus now is definitely on how far and how quickly they will continue to come down.

Whilst there is now some market joy on this development, we remain cautious around the market generally. The Fed didn’t exactly reduce rates by 50 basis points because the outlook is entirely rosy. The wide range of projections from the Fed for the next few years is notable, and there does remain a large degree of uncertainty, which is outlined well in the following chart.

Following the Fed’s move, we have recently been speaking with investors and advised that from 1 November, we will also be reducing the return on our Income Fund. Since the Fund's inception, we have consistently paid investors a fixed return of 10% per annum (paid quarterly), and the Fund has been popular with investors looking for a consistent, stable, asset-backed return. However, as we start to move into a lower interest rate environment and to reflect the momentum that the Fund has, we will be reducing the return for new investors.

If you would like to subscribe to the Fund prior to 1 November to lock in the 10% return, please let us know asap.

Passive versus Active Investing:

Jamie McGee from our team was recently at the Passive Income Medical Doctors’ Real Estate & Entrepreneurship Conference in Dallas, Texas (#PIMDCON24). One of the hot topics was whether it’s better to invest in a ‘passive’ fund like ours or whether it is better to try and seek alpha by actively managing direct real estate investments. With the view that rates are on the way down, there are some investors that believe that longer-term strategies, like investing in multi-family, is something that will work again from an investment perspective.

Obviously, the benefits of diversification and exposure to a granular portfolio of loans against real estate (at low LTVs) offered by our Fund, were not lost on the audience. We continue to see interest in our Fund from groups like these and the broader ‘doctor blogger’ universe - which seeks to educate the over one million registered medical physicians in the United States. We have been actively working to build our profile with this demographic, and this event was a great success.

Private credit - A bubble or just getting started?

We also recently attended the Future Proof Conference in Newport Beach in California (see below for a picture of our team), which is a conference for the investment advisory industry, where advisors meet with fund managers and learn about new offerings and discuss the latest investment trends in the market. One of the hot topics at the conference was ‘private credit’. There has been huge interest in this broad asset class over the last few years, and at the conference we heard some interesting views on it all.

The typical private credit fund is a closed-ended long-term investment vehicle that invests in longer-term loans to larger corporates. We describe our Fund as a ‘private credit’ fund, but with the benefits of having 90-day liquidity (after an initial 1 year commitment), and the underlying loans are more granular and liquid than the typical private credit fund.

In any event, we thought some of the views we heard at the conference were interesting, including that from outspoken fund manager Jeff Gundlach from DoubleLine, who was certainly of the view that there has been more capital raised by the big fund houses into private credit than there are sensible lending opportunities into mid-cap corporates and so on. You can watch the full fireside chat with him here on YouTube. 

We note that Gundlach’s view strikes a stark contrast to that of Marc Rowan from Apollo who at their recent investor day said that he believes that essentially ‘private credit is just getting started’. You can read a great article on this from Marc Rubenstein’s Net Interest here; and you can also watch the Apollo Investor Day here.

We must add that there isn’t the risk of ‘too much money’ being raised by funds like ours targeting the ‘niche’ $55 billion-a-year area of short-term mortgages in the US, just yet!

Again, please check out our paper on private credit here.

📈 Fund Performance

Our Income Fund is continuing to pay a 10% fixed return to investors (that invest over $250k), and importantly continues to be a diversified portfolio of performing first mortgage loans against residential property in the US. As mentioned, for new investors from 1 November, this return will be coming down.

Our Fund brochure can be found here, and we have a new updated Fund factsheet which can be found here.

If you’d like to book a call to run through the Fund, or to hear our views on the market, please contact Jamie on email at jamie.mcgee@faes.co or you can schedule a meeting directly here.

🚀 New Member of our Investor Team

We have recently added another team member to our group, Noah Gonalons, who has joined us as an associate on the investor side of the business. Noah is a native of Los Angeles and a graduate of the American University of Paris.

📰 Our Firm in the Press

While we were at the Future Proof conference we took the opportunity to speak with the press about our fund, which included a segment on Bloomberg TV. If you’d like to listen to the audio of the interview with Christian, you can listen here.

We also had a segment on Wealth Advisor TV, which you can read about and watch here (and like a share).

And we had a profile piece in Authority Magazine, on 5 Things You Need To Succeed In The Modern World Of Finance & Fintech - which you can read here.

* If you don’t already, please follow us on LinkedIn or Twitter/X.

🥽 Things We’re Reading and Listening to:

Some of our team recently read this book and thought it was a great read! It follows the crazy path cut by Masayoshi Son from Softbank as he literally sprayed hundreds of billions of dollars into the technology sector. The book gives a rare peek into what was going on behind the scenes from one of Masa’s top lieutenants, Alok Sama.

🎟️ Events

Below are the events, as of now, we will be attending before the end of the year. 

• AAPL Annual Conference in Las Vegas, NV (Nov 11-12)
• Opal Group’s ABS West in Laguna Beach, CA (Dec 4)

If you will be at one of these events or would like to introduce us to someone that you'd like us to speak with, feel free to reach out ahead of time and let us know.