Market Outlook
As we approach the end of 2024, we reflect on a year marked by significant developments and evolving dynamics in the Australian credit market. This year has underscored the importance of our disciplined investment approach and our commitment to capital preservation. We are pleased to share our insights and performance highlights with you.
2024 has been a transformative year for the Australian credit market. The increased interest and demand for credit assets have driven yields lower, both in listed and private markets. This shift has been accompanied by heightened competition from other fund managers and domestic and international banks. Despite these challenges, our focus on maintaining high credit standards and rigorous transaction analysis has ensured the resilience of our portfolio and a commitment to delivering best-in-class returns and income to our investors.
Key Themes of 2024
1. Increased Competition and Market Evolution: The Australian credit market has continued its evolution towards a more mainstream asset class. This shift has driven significant investment and sophistication within the industry, benefiting our investment model and making it an attractive destination for transactions.
2. Economic Contraction and Monetary Policy: The year saw typical signs of a contractionary phase, including a softening labour market and higher interest rates. We have closely monitored these developments, particularly the implications for the RBA cash rate and its impact on our investment strategy.
3. Asset-Backed Securities and Structural Protections: Our focus on asset-backed securities has been a cornerstone of our strategy. We have implemented robust structural protections to safeguard investor capital, ensuring that our investments can withstand economic stress and deliver consistent returns.
4. Fiscal Policy and Government Spending: Government spending and fiscal policy have played crucial roles in shaping economic conditions. We have balanced these factors with our investment decisions, maintaining a cautious approach to areas most affected by weakening GDP and employment conditions.
5. Investor Sophistication and Engagement: The growing prevalence of credit within investor portfolios has led to a more discerning investor base. We have been impressed by the sophistication of the Australian financial advice ecosystem and the detailed questions we receive about our strategies.
As we move into 2025, we remain cautiously optimistic. While uncertainties will always persist, we are confident in our ability to adapt and capitalise on emerging opportunities. Our investment approach will continue to emphasise diversification, quality, and sustainability. As markets shift and opportunities and risks arise, we pride ourselves on crafting considered and deliberate strategies that are proven over time and we are relentless in our commitment to protecting and growing our clients' wealth.
