The power of Private Credit
In today’s dynamic financial landscape, and with public market volatility constantly rising, investors are increasingly seeking opportunities that strike a balance between solid returns and stability and diversification.
Enter private credit, a rapidly and predictably growing asset class that’s reshaping how investors approach lending and portfolio construction. Unlike traditional bank loans or public bond markets, private credit involves credit funds, providing loans directly to corporate borrowers.
This innovative strategy enables investors to access lending opportunities and returns where banks may be less effective capital providers due to regulatory hurdles, structural challenges, or shifting market conditions.
Why private credit is gaining traction
Private credit is carving out a significant share of the investment market as shrewd investors seek defensive allocations to shield their portfolios from the volatility of public markets.
By demonstrating a track record of outstanding risk-adjusted returns, private credit investments are also often secured, collateralised, and equipped with robust downside protection features. This includes not only security at the loan level, such as personal guarantees, security over property, or General Security Agreements, but also within the structure of the relationship between the manager and the loan originators, such that the latter must contribute a proportion of their equity as a first loss piece.
This defensive positioning in the capital structure provides a critical margin of safety, while the floating rate nature of returns acts as a hedge against inflation – a key advantage in today’s uncertain economic environment.
The benefits of including private credit in your portfolio
Adding private credit to a diversified portfolio unlocks a host of benefits that make it an attractive option for investors seeking both stability and income:
- Attractive Yields: Private credit offers the potential for strong, enhanced yields, providing a compelling income stream compared to traditional fixed-income investments. Our wholesale offering has generated a compounded annual return of 9.55 per cent per annum over eight years, with no negative months and no capital loss.* Our retail offering has returned 7.35 per cent per annum compounded over a little more than two years, also with no negative months and no capital loss.**
*Aura Private Credit Income Fund returns since its inception on 1 August 2017 to 31 July 2025. Net returns after fees and expenses as at 30 June 2025 and assumes reinvestment of distributions.
**Aura Core Income Fund returns since inception on 4 October 2022 to 31 July 2025. Net returns after fees and expenses as at 30 June 2025 and assumes reinvestment of distributions.
Past performance is not a reliable indicator of future performance.
- Low correlation, resilient returns: Historical data shows private credit returns have low to negative correlation with other asset classes, making it a powerful tool for diversification and resilience in turbulent markets. Our private credit offerings have generated positive returns in all months, including those when the S&P 500 and other stock markets declined.
- Regular income: Through contractual borrower agreements, private credit delivers consistent income, offering investors peace of mind.
- High quality: Not all private credit funds are the same. The retail private credit fund holds an externally assessed S&P Equivalent Portfolio Credit Rating of AA. The wholesale private credit fund holds an externally assessed S&P Equivalent Portfolio Credit Rating of BBB-.***
***Portfolio Credit Quality includes cash and is provided by a third-party risk consultant and subject to change. The Fund’s assets are not rated by S&P. - Low volatility: Because returns are contractually agreed upon, private credit investments are generally less volatile than equities.
- Diversification: Private credit portfolios are highly granular, with exposure to a wide variety of borrowers, assets, industries, and geographies, reducing concentration risk. Each of our funds holds over 10,000 loans across 19 sectors of the economy.
- Robust fundamentals: Unlike public markets, which can be influenced by sentiment-driven momentum, private credit prioritises borrower quality, collateral strength, and repayment likelihood, ensuring a capital preservation-first approach.
Expertise in private credit
With deep expertise in credit, non-bank lending, and specialty finance, the investment philosophy centres on first, aiming to protect investor capital while secondly, generating regular income. The proven track record speaks for itself: with an unbroken history of positive monthly returns.
Why private credit matters now
As market volatility increases amid geopolitical frictions, trade wars and debate about the sustainability of the AI boom in equities, and as traditional investment options face challenges, private credit stands out as a resilient, income-generating, and diversified asset class.
Its ability to deliver attractive yields, alongside low volatility and strong downside protection, makes it a cornerstone for portfolios and a must-consider option. Whether you’re looking to hedge against inflation, diversify your investments, or aiming for monthly income, private credit offers a compelling solution.
Ready to explore the potential of private credit? Contact us today on 02 8046 5000 to learn how this dynamic asset class can enhance your portfolio and deliver long-term value.
Retail Private Credit Fund: Download the Monthly Report
Wholesale Private Credit Fund: Download the Monthly Report
Disclaimer
You should read the relevant Product Disclosure Statement (PDS) or Information Memorandum (IM) before deciding to acquire any investment products.
Past performance is not a reliable indicator of future performance. Returns are not guaranteed and so the value of an investment may rise or fall.
This information is provided by Montgomery Investment Management Pty Ltd (ACN 139 161 701 | AFSL 354564) (Montgomery) as authorised distributor of the Aura Core Income Fund (ARSN 658 462 652) (Fund). As authorised distributor, Montgomery is entitled to earn distribution fees paid by the investment manager and may be issued equity in the investment manager or entities associated with the investment manager.
The Aura Core Income Fund (ARSN 658 462 652) (Fund) is issued by One Managed Investment Funds Limited (ACN 117 400 987 | AFSL 297042) (OMIFL) as responsible entity for the Fund. Aura Credit Holdings Pty Ltd (ACN 656 261 200) (ACH) is the investment manager of the Fund and operates as a Corporate Authorised Representative (CAR 1297296) of Aura Capital Pty Ltd (ACN 143 700 887 | AFSL 366230).
You should obtain and carefully consider the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the Aura Core Income Fund before making any decision about whether to acquire or continue to hold an interest in the Fund. Applications for units in the Fund can only be made through the online application form accompanying the PDS. The PDS, TMD, continuous disclosure notices and relevant application form may be obtained from www.oneinvestment.com.au/auracoreincomefund or from Montgomery.
The Aura Private Credit Income Fund is an unregistered managed investment scheme for wholesale clients only and is issued under an Information Memorandum by Aura Funds Management Pty Ltd (ABN 96 607 158 814, Authorised Representative No. 1233893 of Aura Capital Pty Ltd AFSL No. 366 230, ABN 48 143 700 887).
Any financial product advice given is of a general nature only. The information has been provided without taking into account the investment objectives, financial situation or needs of any particular investor. Therefore, before acting on the information contained in this report you should seek professional advice and consider whether the information is appropriate in light of your objectives, financial situation and needs.
Montgomery, ACH and OMIFL do not guarantee the performance of the Funds, the repayment of any capital or any rate of return. Investing in any financial product is subject to investment risk including possible loss. Past performance is not a reliable indicator of future performance. Information in this report may be based on information provided by third parties that may not have been verified.
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.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
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.
