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Let down by bonds? Private debt is worth a look

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Let down by bonds? Private debt is worth a look

For all the doom and gloom being proffered by various analysts it might surprise you to learn the Australian economy is actually growing. And it grew 2.7 per cent over the last year. Sure, the rate of growth might be slowing, but we’re still growing.

And if you consider all the job vacancy signs posted on every second retailer and restaurant window, you’d be forgiven for thinking we’d be growing a lot faster if those positions were filled.

Many Australian businesses – those SMEs representing Australia’s growth engine – could be growing a lot faster if it wasn’t for a lack of staff or capital.

And it’s capital that has been pulled at precisely the time those businesses need it most. Remember, the big banks employ those same strategists and commentators who are worried about recessions. 

When banks are worried about recessions, they pull back on lending – producing the very outcome they seek to avoid.

And when banks do lend, they often take longer to approve a loan than the period the business needs the funding. There’s a remarkable number of businesses needing smaller loans for short periods of time.

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Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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