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.
Authors
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.
Click the download button below for the full report.
Important Information:
This document is issued by Schroder Investment Management Australia Limited (ABN 22 000 443 274, AFSL 226473) (Schroders). It is intended solely for wholesale clients (as defined under the Corporations Act 2001 (Cth)) and is not suitable for distribution to retail clients. This document does not contain and should not be taken as containing any financial product advice or financial product recommendations. This document does not take into consideration any recipient’s objectives, financial situation or needs. Before making any decision relating to a Schroders fund, you should obtain and read a copy of the product disclosure statement available at www.schroders.com.au or other relevant disclosure document for that fund and consider the appropriateness of the fund to your objectives, financial situation and needs. You should also refer to the target market determination for the fund at www.schroders.com.au. All investments carry risk, and the repayment of capital and performance in any of the funds named in this document are not guaranteed by Schroders or any company in the Schroders Group. The material contained in this document is not intended to provide, and should not be relied on for accounting, legal or tax advice. Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this document. To the maximum extent permitted by law, Schroders, every company in the Schroders plc group, and their respective directors, officers, employees, consultants and agents exclude all liability (however arising) for any direct or indirect loss or damage that may be suffered by the recipient or any other person in connection with this document. Opinions, estimates and projections contained in this document reflect the opinions of the authors as at the date of this document and are subject to change without notice. “Forward-looking” information, such as forecasts or projections, are not guarantees of any future performance and there is no assurance that any forecast or projection will be realised. Past performance is not a reliable indicator of future performance. All references to securities, sectors, regions and/or countries are made for illustrative purposes only and are not to be construed as recommendations to buy, sell or hold. Telephone calls and other electronic communications with Schroders representatives may be recorded.
Authors
Topics