Many Australians are familiar with real-estate investing through home ownership or buying a rental property. But what about investing in real estate debt? Investing in private credit funds can be an attractive option for many investors seeking income and diversification to their portfolio. These FAQs provide an overview for investors considering private credit funds.

Each investor should perform thorough due diligence and consult with financial advisers to align such investments with their financial goals and risk appetite. Here are some common FAQs that potential investors might have:


How do I invest in a private credit fund?

Investments typically require meeting the sophisticated wholesale investor threshold, completing an application process and paying the capital to the investment manager.

What should I consider before investing?

Consider your risk tolerance, investment horizon, liquidity needs, and overall portfolio diversification before committing to a private credit fund.

What are the downsides of private credit?

Private credit is lending to a variety of borrowers. And any sort of lending brings the risk of borrower default, and the security of the loan would need to be called to cover the loan proceeds.

How do you safeguard against loan defaults?

Before issuing a loan, our credit team does a lot of due diligence to get comfortable that the loan can be serviced and repaid. We then structure the loan to ensure there are sufficient lending protections, and that the loan will still be paid if the borrower’s credit quality deteriorates.

What sort of allocation could private credit typically have in a balanced portfolio?

It varies, but probably less than 15% of a portfolio. In some portfolios, private credit will be held in the alternative assets’ allocation as a driver of income for the portfolio. If you’re considering adding private credit to your portfolio, it’s essential to assess its potential impact on overall returns and risk-adjusted performance.