The increased regulatory oversight by the Australian Securities and Investments Commission (ASIC) should not scare investors away from private credit but give them more confidence in the product – it remains an attractive asset class with valuable diversification benefits, says Tanarra Credit Partners managing partner, Peter Szekely.
He says there is good opportunity for investors in the middle market segment of private credit from a risk return perspective.
“Private credit continues to be an attractive option for investors, particularly given the volatility we have been seeing in equity markets of late. It provides an excellent hedge against portfolio risk when building a diversified portfolio.”
Mr Szekely says ASIC’s scrutiny of the market is a positive step that will bring greater confidence to an asset class that is growing rapidly.
“ASIC has been focused on a few key areas of concern in the local private credit market, including what sectors funds are invested in, how managers value portfolios, the potential conflicts that exist, and the importance of transparent reporting for investors.”
He says there are four factors that investors should consider when assessing whether to invest in a private credit fund.
