Types of investors we see in Private Credit. What style of investor are you?

There are a wide range of investors in our private credit funds with varied investment styles.  Over the last five years it has been interesting to observe this range in our flagship private credit fund. 

Those investor styles include the following:

Income investors

Self-funded retiree: This investor appreciates the consistency of monthly income payments that the funds produce.  They invest in the suite of funds that provide them regularity of income and often compare their monthly income to their traditional share investing where they have to wait six-monthly for stocks to pay their dividends.  Having ceased working this group often utilise the funds as a form of salary replacement.

Transient/Cash-event investors: Often this subset of people have had a liquidity event and are seeking an investment in between another potential purchase.  This is often related to a property sale, either in between their next purchase, or in the case of an investment property sale where they may be undecided if going back into a further investment property.  

Professionals in the workforce:  We observe we are seeing an increasing number of investors that are in the workforce as professionals or often business owners who are investing in the funds to supplement their income and/or build their wealth pool.  They are homeowners, not retired, often investing via their family trust so they can allocate their income generated across their family trust members.

Diversification investors

The re-investor seeking equity like returns without the volatility: We observe this style of investor often notes that they target close to a 10% return when they invest, viewing such a target as an equity-like return.  Whilst they often appreciate distributions, they don’t actually require them as an income stream to fund their lifestyle. They have other sources of incomes, such as wages and rental proceeds, that fund their lifestyle. Instead they choose to re-invest all distributions, creating a compounding affect that pushes their returns above the 10% level, without having high levels of unit price volatility that they have experience in the past in other asset classes.

The financial advisor who is increasing their client weightings toward private credit: 

We have observed an increasing cohort of financial advisors, particularly over the last 2 to 3 years, who have been increasing their clients’ exposures to private credit by adding the funds.  This is likely a deliberate asset allocation adjustment to include a core weighting to alternatives.  Advisors have recognised alternatives as a core allocation in investor portfolios, having moved well beyond the traditional 60/40 split between equities and fixed income.  The fund provides them a diversified exposure to the alternatives asset class.

The SMSF investor: The SMSF investors are commonly looking to build their portfolio of SMSF assets to be diversified with the objective of lowering their market risk correlation of their overall portfolio.  They often have longer time frames for their assets, often still in the workforce themselves and appreciate that the funds provide them with a genuine diversified private markets exposure.

Offshore expatriates: Expatriates that have Australian dollar assets and are seeking to grow their Australian-based wealth whilst they are working overseas.

Fixed Income Focused

Asset protector/generational wealth transfer: There is a subset of investors that note they are almost solely focused on capital preservation, often as they are seeking to hand their pool of assets down to the family.  This group are generally less sensitive to returns but like to see very low-price volatility to coincide with their capital preservation strategy.

The fixed income allocator: Investors that are regular allocators to the fixed income asset class utilise the funds.  We observe this tends to be when they are adding private credit as part of their fixed income asset class holdings, or they add the bond income fund which provides wholesale fixed income exposure through a diversified portfolio.

Family offices: Family offices as long-time frame investors utilising the funds for their differentiated exposures.  They tend to recognise that the majority of assets have been originated and structured by the capital markets team providing private credit exposures that are differentiated to other private credit they already hold as part of their large portfolios of assets.

The wide breadth of investor types, shows the iPartners Credit Investment Fund achieves a range of objectives in private credit.  With over five years of track record having produced 9.89% per annum since inception, and 10.1% over the prior twelve months, the fund provides a wide range of investors a diversified exposure to private credit as an asset class.    

Click here to learn more about our iPartners Credit Investment Fund.