For the best part of a decade now, income hungry investors have battled to find a decent yield. Thankfully, the capital gains from falling rates have offset the lack of income. But with rates around the world close to zero, it seems there’s limited room left for more capital gains.
Let me share an example. According to the ATO, the average super balance for a 65-74-year-old man is $446,800. Meanwhile, the average super balance for a 65-74-year-old woman is $378,600. So, let’s say our couple has a combined super balance of $825,200. Quite a healthy nest-egg. But with term deposit rates at around 1.75%, that will produce just $14,441 of income over the course of a year.
It should come as no surprise then that private credit, with its chunky yields, has seen a boom in popularity in recent times. Once purely the domain of institutional investors, these products are increasingly available to retail investors through listed structures on the ASX. Offering returns in the mid-to-high single digits, they attract a premium for the higher risk nature, while generating additional fees from deal origination.
Andrew Lockhart, Managing Partner of Metrics Credit Partners, has been a pioneer in this sub-sector in Australia. He worked for decades at a Big Bank on these deals, and then nine years ago decided to start Metrics with his business partners. In this week’s episode of The Rules of Investing, we discuss how the GFC shaped his investment philosophy, how Australia's big banks have changed the way they’re funded, and the sectors he'd be avoiding if the market closed for 5 years.
Chris Stott’s 5 high conviction stock ideas for the new bull market
Christopher Joye: No margin for error for risk junkies craving rate cuts
Why Ben Clark is taking profits on growth stocks (and where he's putting that money to work)
Trailer: Ben Clark, TMS Capital
The next 10 years in ETF growth could be dominated by this asset class
Warryn Robertson’s guide to picking the best infrastructure stocks on the ASX and abroad
The policy overhaul Shane Oliver would make to secure Australia's fortunes
Where Soul Patts is investing for long term growth and dividends
How Hyperion unearths rare but exceptional growth companies (plus two that pass their filters)
How to invest $1 million in 2024
The lead indicator for Dion Hershan’s best trades (and two high quality stocks for the ”slow grind” ahead)
Ben Griffiths’ small cap playbook as animal spirits awaken
2 killer growth stocks (and why culture is key to successful small caps)
Trailer: Qiao Ma, Munro Partners
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Invest in what you know, avoid what you don’t: Lessons from a Hall of Fame fund manager
Emma Fisher: Why it pays to be bullish (and the most outstanding idea on the ASX today)
Matthew Kidman: Get ready to run with the bulls
Hedge fund managers never name their shorts. This one does...
Bob Desmond names his ”forever” stock
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