WOODBRIDGE LEARNING
Empowering investors with financial insight.
WHAT’S WOODBRIDGE LEARNING?
Woodbridge Learning is our dedicated resource to provide education to investors in private credit. Our intention is to sell the asset class, not the investment manager, and to educate investors on what to look for when investing in a private credit fund.
We believe that educating investors about the risks is essential to unlocking the true potential of this exciting asset class.
Once investors understand what to look for in a private credit fund, our view is that we are empowering them to make informed decisions, achieve their financial goals, and drive sustainable growth within the private credit industry.
Through workshops and practical tools we provide practical tools to navigate a complex market. Covering governance, loan selection, valuation, risk management, and transparency, we give investors the confidence to choose funds aligned with their values. By demystifying private credit, Woodbridge Learning builds trust, promotes accountability, and sets new standards in investor education, empowering investors to allocate capital with confidence.
INVESTORS IN PRIVATE CREDIT NEED TO THINK DIFFERENTLY
Investors in private credit need to think differently, because not all opportunities are created equal. Each loan type carries a unique risk and return profile, shaped by asset class, borrower, and market conditions. Similarly, lenders vary in experience, deal flow, and their ability to navigate challenges when they arise. Investment strategies also differ, with structures and details that can significantly impact outcomes. Even private credit funds themselves are not the same — transparency, governance, and fee models vary widely. Recognising these differences is essential to making informed choices, protecting capital, and unlocking the true potential of the asset class.
Not all loans are the same
Different loan types have very different risk and investor return profiles.
Not all lenders are the same
Lenders have different backgrounds, deal flow pipelines and workout expertise.
Not all investment strategies are the same
Each strategy is unique, the devil is in the detail.
Not all private credit funds are the same
Funds have different level of transparency, governance and fees.
WHAT’S ALL THE NOISE ABOUT?
Private credit in Australia and New Zealand is gaining popularity because it combines high yield potential, inflation resistance, a growing market demand, and reduced correlation with broader markets. These attributes make it especially attractive for investors seeking to diversify their portfolios and secure higher returns amid current economic conditions.
Higher Yields in a Low-Interest Rate Environment
Despite rising rates, traditional fixed-income investments like government and corporate bonds still offer relatively low yields compared to the potential returns from private credit.
Banking Sector Trends and Regulatory Changes
Banks have faced tightening regulations around lending. This has opened opportunities for private credit providers to fill the gap, often with attractive risk-adjusted returns.
Lower Correlation with Public Markets
Private credit investments are typically less correlated with stock markets than public debt or equity markets, providing a diversification benefit. In volatile markets, this stability is appealing for portfolio diversification and risk management.
FAQ
Investments in private markets refer to investments made in assets that are not traded on public exchanges. They typically include assets such as private credit, private equity, property and infrastructure.
Historically, private markets have only been available to institutional investors and High Net Worth investors.
Private Credit is the provision of loans to borrowers by private lenders rather than loans provided by retail banks. It typically has 5 different names – private credit, private debt, alternative lending, non-bank lending and private lending – it’s all the same.
Private Credit Funds typically invest in 4 different types of loans – 1st mortgage loans, 2nd mortgage loans, corporate loans and preferred equity loans – which all have four very different types of risk and return profiles for investors – it’s NOT all the same.
The loans in a Private Credit Fund are typically ‘secured’ against 4 different types of assets which can be valued externally or internally by the Manager – physical asset backed, balance sheet backed, income backed or commodity backed. They all have very different types of risks and liquidity – it’s NOT all the same.
A private credit fund is an investment vehicle that operates by raising capital from multiple investors and then uses that capital to originate a diversified portfolio of loans (sometimes called pooled funds). These loans are typically extended to businesses, real estate projects, or other borrowers who may not have access to traditional bank financing.
There are typically 4 different types of loans which all have very different types of risk and return profiles for investors
1st Mortgage Loans are the lowest risk, and typically generate investment returns of 8%-10% for investors. These loans have full control over the asset and the borrower, and the loan is repaid 1st from the asset sale.
2nd Mortgage Loans and Preferred Equity Loans are highest risk, and typically generate investment returns of 15%-20%. These loans have no control over the sale of the asset, are very risk sensitive to a downward movement in the asset value, and the loan is paid after the 1st mortgage has been fully repaid.
Corporate Loans are blend of risk, and typically generate investment returns of 8%-12%. These loans are secured against borrower’s balance sheets not a physical asset, and are less liquid than asset backed loans.
In a volatile market, non-levered private credit funds offer a more resilient approach to generating returns for investors.
Reduced Risk and Volatility – levered private credit funds use borrowed capital to boost returns, but this leverage amplifies risks as much as it does returns. In downturns, leveraged funds can face liquidity squeezes, higher borrowing costs, and potential margin calls. Non-levered funds, however, avoid these pitfalls, maintaining stability through market turbulence.
Predictable Cash Flows and Consistent Returns – non-levered private credit funds often focus on more stable cash-flowing assets, providing more consistent returns. Without the need to cover interest payments or the pressure to “chase yield” to meet debt obligations, these funds can prioritise conservative investment strategies that better align with long-term investor interests.
Downside Protection – by not employing leverage, non-levered private credit funds are generally better positioned to protect principal, especially in a down market. This focus on capital preservation is attractive to investors seeking dependable returns without compromising on safety.
Enhanced Transparency and Simplicity – a non-levered structure is inherently simpler, with fewer layers of debt and risk. This translates to greater transparency for investors, who can clearly see where their returns are coming from, fostering trust and long-term alignment with fund managers.
In private credit, valuation is everything.
External Valuations provide several benefits to investors in private credit –
✅ Independence and Objectivity – external valuations reduce potential conflicts of interest, ensuring that asset values reflect fair market conditions rather than internal biases.
✅ Investor Confidence – investors increasingly expect third-party assessments to validate fund performance and maintain transparency.
✅ Regulatory and Compliance Alignment – as scrutiny on private credit continues to grow, independent valuations help funds meet evolving regulatory requirements and best practices.
✅ Market Benchmarking – external experts bring a broader view of market trends, providing a more accurate assessment of credit risk, liquidity, and asset pricing.
1. Is the fund a blended fund (multiple loan types) or a non-blended fund (single loan type)?
2. If the fund is blended, what is the split of 1st mortgage, 2nd mortgage and corporate loans, LVR’s and limits of each?
3. If the fund is non-blended, does the fund IM allow it to invest in 2nd mortgage or corporate loans in the future?
4. Does the fund show investors the underlying loan book? i.e., can you see the details of all the loans in the portfolio?
5. Does the fund have an external (independent) trustee of the fund to represent investor interests?
6. Does the fund currently, or does the fund IM, allow the fund to use leverage (external debt)?
7. Does the fund currently have any loans in default and/or receivership?
8. If there are loans in default, ask questions about why. How long for? Is the fund currently earning default interest?
9. Are there any loans in the fund that have a related party equity interest?
10. Does the manager have multiple funds? Can they move loans between funds without investor approval?
WANT TO LEARN MORE?
Contact us to find out how we can support you and your team in learning more about private credit.
