Source: selfmanagedsuper
Author: Darin Tyson-Chan
Date: 4 September, 2023
Boutique investment manager and non-bank lender Zagga has launched its initial unitised private debt fund aimed at providing investors with access to an asset class that can operate as a hedge against the rising interest rates currently pervading the Australian economy.
The Zagga CRED Fund has been released to service wholesale investors who are looking for a portfolio allocation that will generate a stable and defined income while also providing an element of capital preservation.
The underlying assets of the offering will be credit-vetted, mortgage-secured loans for the commercial property sector.
Zagga chief executive Alan Greenstein suggested the new fund will enhance the diversification characteristics of investment portfolios.
“Since our inaugural loan investment in 2017, we have convincingly demonstrated to our investors the value of incorporating CRED (commercial real estate debt) investments into their portfolios. These investments represent an alternative, non-correlated option – a middle ground, so to speak – to conventional equity markets,” Greenstein noted.
“They can be a solid hedge against inflation. They deliver determinable, consistent cash returns that surpass, sometimes materially, the interest rates offered by traditional bank deposits, without a commensurate increase in risk.
“Our commitment to this alternative investment approach has been confirmed by its increasing inclusion in many investment portfolios – often as the cornerstone of a defensive investment strategy and the burgeoning popularity of the CRED sector – both for investors seeking returns and borrowers seeking an alternative funding source to traditional banks.”
The minimum investment amount for the CRED Fund is $50,000 and it has been established to deliver an annual return of 4 per cent in excess of the official cash rate.
The boutique manager has been in the Australian market for six years and in that time has delivered an average return of 8 per cent per year and has amassed a client base of over 500 investors.
