Fifteen years ago, many of my friends were in their early to mid-fifties. With retirement still a long way off, and living their best lives, the volatility of the stock market was something to be endured, if not salivated over, because it was the price to pay to create serious wealth.
That belief remains true today. There exists a contract between the long-term wealth creation provided by the stock market – especially smaller capitalisation companies – and the associated volatility.
If you want to create serious wealth, you need to own a successful business (a look at Australia’s rich lists confirms this – among the wealthiest Australians you won’t find an employee who has saved their money in a bank account). The stock market allows investors the opportunity to own a slice of some of the country’s most successful enterprises, which are platforms for wealth creation over the long term.
But not everyone wants to ride the ups and downs of the stock market. Now, fifteen years later, as they near their 70th birthdays, some of those same friends are seeking alternatives, a way to preserve their wealth and enhance their income without being asked to stomach the vicissitudes of Australian and global equity markets.
Enter private credit funds, such as the Aura High Yield SME Fund or the Aura Core Income Fund. Both funds invest in a diversified portfolio of small to medium-sized business loans.
Investing in private credit (also known as private debt) is increasingly considered a prudent strategy for those seeking diversification and consistent returns.
Meanwhile, advisers, researchers and consultants – those who provide important advice on portfolio construction – are recognising this emerging asset class. The benefits of consistent monthly income and uncorrelated returns, and the important economic role private credit plays in supporting Australian businesses, cannot be ignored.
When considering private credit what are its features and benefits?
Private credit, with its unique set of risks, may only be suitable for a portion of an investor’s portfolio. Yet, its potential for consistent monthly returns, protection against the volatility of public markets, and diversification benefits make it a compelling alternative or complement to equities in a well-balanced investment portfolio.
You should read the relevant Product Disclosure Statement (PDS) or Information Memorandum (IM) before deciding to acquire any investment products.
Past performance is not an 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, subject to certain conditions being met, 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. The PDS, TMD, continuous disclosure notices and relevant application form may be obtained from www.oneinvestment.com.au/auracoreincomefund or from Montgomery.
The Aura High Yield SME 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 Fund, 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.