Traditionally, multi-asset portfolios have relied on the negative correlation between bonds and equities for diversification. Yet, increasingly, we are seeing a positive correlation in public markets. 2022 was an extreme example, where we saw significant correlated dips in both bonds and equities. With current heightened volatility in global markets, investors need true diversification and downside protection via uncorrelated asset classes.
As public markets fluctuate, the need for portfolio resilience and alternative income sources has never been greater. This has driven institutional and high-net-worth investors to seek diversification in uncorrelated asset classes, such as real estate private credit.
Just as corporate bonds provide an alternative to buying shares in companies, CRED provides exposure to the property market without needing to own the assets. However, unlike bonds, which depend on the yield curve, CRED offers a contracted return from day one.
Tom Cranfield, Director, Investment & Risk, joined Ausbiz to discuss the critical role private credit plays in financing sustainable housing and tackling Australia’s housing supply shortage.
Despite the RBA commentary, financial markets are continuing to price in further interest rate cuts with a cash rate of approximately 3.40 per cent factored in by the first half of 2026. Softer economic data out of the US in recent weeks has helped reinforce the market pricing for lower interest rates.
“I don’t think more regulation is going to necessarily improve the outcome of the performance and all that will do potentially is erode returns.”
The Australian Securities & Investments Commission has released a discussion paper on the dynamics between public and private markets.
ASIC has warned private market operators as it moves to expose the opaque market to greater transparency.
Despite easing rates, the Australian private credit market is poised to continue attracting investors seeking stable, income-generating alternatives to traditional fixed-income assets.
Despite global uncertainty, Australia’s private credit market is predicted to see strong growth in 2025, fuelled by business lending and attractive returns, as the Reserve Bank’s cautious rate cuts support continued demand.
We would like to acknowledge the Traditional Custodians of the lands, seas, and communities in which we provide our services. We would also like to pay our respects to the Elders past, present and emerging, and the continuing cultural influence they have on Australia.
Zagga Market Pty Limited (Australian Credit Licence 490904) ACN 611 662 401 acts as the Servicer of loans acting on behalf of the credit provider, Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786, trustee of the Zagga Investments Lending Trust
All portfolio numbers quoted correct as at 31 January 2025.
*Average investor return across the active portfolio as at 31 January 2025.
**Target return is after expenses and any applicable management fees for the year ending 30 June 2024. OCR = Australian Reserve Bank Official Cash Rate.
Past performance is not a reliable indicator of future performance and investments are subject to investment risk, fees and costs. Returns are not guaranteed.
Prospective investors wishing to invest in a Zagga direct investment or a Zagga Fund should fully consider the Information Memorandum, ZFF Fact Sheet and/or ZWF Brochure, available from Zagga, before applying to invest. Investments are subject to risks.
Articles on this website have been prepared by Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786 (Zagga) for information purposes only. It doesn’t take into account your objectives, financial situation or needs, nor is it intended as a substitute for any accounting, tax or other professional advice, consultation or service. Nothing in this article shall be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from engaging in any transaction.
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Economic conditions may change.
Any analysis provided in this article is based on information obtained from sources believed to be reliable but Zagga does not make any representation or warranty that it is accurate, complete or up to date. Zagga accepts no obligation to correct or update the information or opinions in it. Any opinions expressed in this article are of the author and is subject to change without notice. Readers are reminded to exercise caution and use their own judgment when interpreting and applying the information contained in this article No member of Zagga accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of such information.
