Investors in cash and Australian government bonds who are worried to lose money due to successive rate cuts should consider investment exposures to corporate loans as it had more attractive risk-adjusted returns, according to Metrics Credit Partners.
According to Metrics’ Andrew Lockhart, the Australian corporate loan market still offered attractive returns which similarly to all fixed income provided additional portfolio diversification which was particularly important for retirees who need to generate regular income while protecting their capital base at the same time.
Lockhart stressed that many equity investors had recently experienced income cuts as companies were reducing their dividend payments, forcing them to seek an alternative source of income.
At the same time, investing in directly originated private loans to Australian companies gained recognition among some investors.
“In a low-rate and low-yield environment, the Metrics Direct Income Fund provides a potential investment option for investors – such as retirees and self-managed super funds – to replace their declining dividend and interest returns with an alternative source of income,” Lockhart said.
The chief investment officers of UniSuper, HESTA, and TelstraSuper have elaborated on opportunities and risks that are top of mind when it comes to illiquid assets like private credit within their portfolios.
In an address to the National Press Club last week, the incoming chair of Australia’s sovereign wealth fund said institutional investors could play a role in the winding road towards net zero.
The FSC chief executive will join a long line-up of renowned speakers at the inaugural summit.
Australia’s second-largest super fund has explained its approach to the Asian giant and how it is balancing underlying risk, adding that avoiding China altogether may not be a “doable strategy”.
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