woodbridge learning
think different //
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.
Learning Sessions
As part of our commitment to industry education, we are pleased to offer free one hour learning sessions to Wealth Advisors to provide ‘a back to basics’ overview of private credit in Australia. These sessions are a safe place, where there are no silly questions, and gives wealth advisors a unique opportunity to ask the questions they want to ask. Importantly, these sessions are not a sales pitch - we will not be providing any overview of our business and/or our funds.
Interested in a Woodbridge Learning Session?
Investors in Private Credit Need to Think Different.
Woodbridge was born out of a desire to be different, in an industry that is notoriously ‘opaque’.
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.
- transparency matters in this asset class.
- external trustees’ matter in private markets.
- responsible investment matters, always.
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.
Strong Demand from Borrowers - Australia has high demand for real estate financing. Many SMEs and developers need access to credit but may not qualify for traditional bank loans, leading them to private lenders who offer tailored financing. For investors, this means a steady pipeline of lending opportunities with favorable terms.
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.
Enhanced Risk Management in Private Credit Deals - Many private credit investments include covenants and other protective terms that mitigate default risks, offering investors an extra layer of security compared to other high-yield investments.
Frequently Asked Questions
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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.
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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.
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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.
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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.
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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.
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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?
Insights
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Why Does Transparency Matter?
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Why Does an External Fund Trustee Matter?
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Why Do 1st Mortgage Loans Matter?
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What's a Blended and a Non-Blended Fund?
Other Resources
How a Private Credit Fund Works
Click below to watch a short video -
- How does Woodbridge focus on capital preservation and stable monthly income?
- How does Woodbridge manage construction loan risk?
- What happens if the asset value of a Woodbridge loan falls during the loan term?
- Why do Woodbridge’s funds stand strong, even in a falling interest rate environment?
- How does Woodbridge prioritise ESG and responsible investing?
- Can Internal Rates of Return (IRR’s) be misleading to investors in private credit?
- Can quoting ‘Since Inception Returns’ be misleading to investors in private credit?
White Papers and Research Notes
This information has been prepared for general information only by Woodbridge Capital Pty Ltd (Woodbridge) (ABN 82 656 985 572). Woodbridge Capital Pty Ltd (ABN 82 656 985 572), Authorised Representative of Woodbridge Funds Management Pty Limited (AFSL 550122). Woodbridge is the investment manager for the Woodbridge Private Credit Fund (the Fund), an open-ended, unregistered unit trust, which is only available to wholesale investors (as defined under the Corporations Act 2001). This information is given in summary form and does not purport to be complete. This information may have been derived from publicly available sources that have not been independently verified. This information should not be considered as advice or a recommendation to wholesale investors and/or advisors in relation to holding, purchasing or selling securities or other financial products or instruments and does not consider your particular investment objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information having regard to these matters, any relevant offer document and you should seek independent financial advice. No representation or warranty is made as to the accuracy, completeness or reliability of the information. All securities and financial product or instrument transactions involve risks, which include (among others) Liquidity, Operational, Strategic and Governance risks.
This information does not constitute an offer to sell or a solicitation of an offer to subscribe or purchase or a recommendation of any securities and may not be distributed in any jurisdiction except in accordance with the legal requirements applicable in such jurisdiction.
This information may contain forward looking statements – that is, statements related to future, not past, events or other matters – including, without limitation, statements regarding our intent, belief or current expectations with respect to Woodbridge business operations, market conditions, financial condition, capital adequacy, provisions for impairments and risk management practices. Wholesale investors and/or advisors are cautioned not to place undue reliance on these forward-looking statements. Woodbridge does not undertake any obligation to publicly release the result of any revisions to these forward-looking statements or to otherwise update any forward-looking statements, whether because of new information, future events or otherwise, after the date of this presentation. Actual results may vary in a materially positive or negative manner. Forward looking statements and hypothetical examples are subject to uncertainty and contingencies outside Woodbridge’s control. Past performance is not a reliable indication of future performance.