What does high inflation mean for investors?

With today’s release of the latest inflation numbers in both Australia and New Zealand, we can expect rising interest rates to continue again in 2023, as central banks continue to try and curb inflation.

Australia’s annual CPI movement to December 2022 came in at a whopping 7.8% (it’s highest point since 1990) and New Zealand printed 7.2%.

What does this mean for investors?

As high inflation continues to erode the purchasing power of savings and investment returns of fixed income investments (e.g. bonds, cash), now is the time for investors to take advantage of private credit funds that have fully floating interest rates while high inflation continues to drive interest rates up. Like the Woodbridge Capital Private Credit Fund !

100% of loans in the Woodbridge Private Credit Fund have floating interest rates (with a floor – the floor is important as rates soften late this year / early next year).

As the loan rates in the Fund are linked to the bank bill swap rate, rising interest rates will cause investor returns to increase, providing a hedge against inflation.

Our current weighted Loan to Value Ratio (LVR) of our 1st mortgage loan book, is also only 52% which continues to provide significant headroom for any unexpected fall in asset prices over the next 12 months.