Five Reasons to Consider Private Credit

Insight #5

Private credit is no longer a niche alternative – it’s a core component of modern investment portfolios. As banks continue to tighten lending and investors search for stable, asset-backed returns, private credit has emerged as a disciplined, transparent way to earn income that’s both consistent and connected to the real economy.

Here are five reasons more investors are taking notice: 

1. Consistent, contractual income
   Private credit delivers predictable, contracted returns. Investors earn income through regular interest and fees paid by borrowers – rather than relying on market performance or dividend cycles. That makes it an appealing option for those seeking steady income, particularly in a higher-rate environment.
2. Strong security and capital protection
   Most private credit loans are backed by tangible assets such as property. In many cases, those loans are secured by a registered first mortgage, meaning investors sit at the top of the capital stack. This structure prioritises capital preservation and provides a clear path to recovery if a borrower defaults.
3. Diversification that behaves differently
   Private credit offers diversification beyond traditional equities and bonds. Its performance is driven by borrower quality, asset security, and disciplined loan management – not short-term market swings. For investors, that means lower volatility and greater stability through economic cycles
4. Transparency and regulation are improving
   The sector has matured significantly in recent years. ASIC’s recent regulatory review has placed a spotlight on disclosure, valuation, and governance standards – prompting leading managers to demonstrate robust, independent oversight. For investors, this scrutiny helps separate genuine lenders from unregulated operators and raises the quality of the entire asset class.
5. A market with room to grow
   Private credit still accounts for less than a quarter of all commercial lending in Australia – far below levels seen in the US and Europe. As borrowers seek flexible capital and institutional-grade lenders set higher standards, the opportunity for well-governed funds is expanding rapidly.