Private credit has rapidly evolved from a specialist asset class into a core component of many Australian investors’ portfolios. As traditional fixed income markets continue to react to a challenging economic and trade environment, investors are increasingly drawn to the promise of enhanced yields and diversification through private lending opportunities.
However, the rapid expansion of the sector has brought uneven standards in origination, underwriting and risk management. The label private credit now covers a broader spectrum of investment opportunities, from conservative, asset-backed corporate loans to speculative, highly leveraged strategies. For advisers and investors alike, distinguishing between these approaches is essential to assessing true risk-adjusted returns and funds that best meet investor objectives.
Advisers must have a deeper understanding of manager capability, portfolio transparency and credit discipline. The opportunities in private credit are real, but so too are the risks for those who don’t look closely enough beneath the surface.
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