Why now is the time to consider investing in private debt
Welcome to the dislocation of the Australian loan markets; where a marked shift towards structures that meet the needs of institutional capital is occurring. This change provides greater opportunity for those who are on a quest to find diversified sources of income to make a strategic allocation to this newer asset class.
While the future of traditional fixed income investing may look gloomy, we believe private debt can help investors meet their income needs at a time when it is harder than ever to find real returns.
The market has become increasingly challenging with equity dividends deferred or depressed and bonds offering minimal or even negative returns. Private debt can help fill the gap however given the complexity, it is our view that experience is the key to successful investing to avoid any potential pitfalls. A specialist manager can help to navigate these risks.
The benefits of investing in private debt include diversification, a reduction in volatility, potential for superior risk-adjusted returns, and access to a range of duration profiles all with stable underlying income characteristics that have low or no correlation to more volatile listed markets. The complexity and illiquidity of this asset class gives rise to a premium not afforded to other asset classes within this sector.
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