Credit Masterclass Summary

The role of fixed income in traditional strategic asset allocation portfolios was threefold; deliver an income, protect real capital and reduce volatility. Thirty years of falling interest rates, quantitative easing, and now yield curve control has seen fixed income assets deliver exceptional returns. As it stands today, however, all three roles of traditional fixed income assets are coming into question, with yields close to zero and the threat of capital losses, should interest rates rise in the years to come. In an environment of near zero interest rates, institutional investors and financial advisers alike are turning to alternative credit.

Private debt, at its most simple, is defined as the provision of credit or loans to companies, individuals or other entities; effectively acting as the lender. A confluence of events over the last decade, but primarily changes in the risk weightings, banks apply to nonresidential property backed debt, has seen a significant constraint in the supply
of debt to businesses across Australia. This looks set to change opening up a channel for investors.

The retreat of the Big Four Banks offers products with a rare combination of higher income, secured by a range of different assets, and diversified across multiple industries. The growing opportunity set has seen a flood of operators enter the market, or open institutional products to the broader market.

Not all credit strategies are created equal or aim to address similar segments. As with any asset class, credit requires a detailed understanding to assess its appropriateness for any investor. In this session, our experts will cover the most importance aspects to understanding the opportunity in credit, touching on the following issues across six modules:

1. The role and outlook for credit
2. Income diversification through private credit
3. Evolution of the real estate credit sector
4. Loan Structuring: Art or Science?
5. Fitting credit into portfolios