Alternatives investment manager Salter Brothers hopes its recent acquisition of private credit fund manager Causeway Asset Management will provide exposure for SMSFs to an asset class they sometimes find difficult to access.
“Private credit allows for exposure to an asset class not typically available to investors and has less competition from institutions seeking to deploy large amounts of capital. This allows skilled and well-connected managers to secure attractive deals with favourable terms,” Salter Brothers debt capital markets and credit fund managing director David O’Connor explained.
Salter Brothers announced its acquisition of Causeway Asset Management, which has funds under management and advice of over $600 million, in late August. Causeway provides direct lending solutions to small-to-medium enterprises and middle-sized corporates in Australia and focuses on managing corporate loan portfolios exceeding $1.7 billion.
O’Connor pointed out private credit can offer SMSF investors important portfolio diversification.
“Private credit generally sits between low-risk, low-return assets, such as cash or bonds, and higher-risk growth assets, such as equities, and tends to have low correlation to these other asset classes, providing a prudent diversification tool for portfolio management,” he told selfmanagedsuper.
“Typically, the loans provided are on a senior secured basis, meaning investors rank ahead of equity holders in a recovery scenario.”
In terms of asset allocation, it would be a useful income inclusion in a portfolio as private credit is typically focused on income rather than on growth or total return.
“It is also often shorter maturity than other private markets investments, such as private equity and infrastructure – a mix of floating and fixed-rate investments with a minimum cash paid servicing requirement,” O’Connor said.
Causeway Asset Management founding director Tim Martin indicated the firm had previously partnered with Salter Brothers on transactions and those experiences demonstrated the organisations shared similar values and culture.
“Importantly, we have a shared perspective on conservative underwriting practices and a laser focus on capital preservation across our portfolios, which means we are well placed to provide a compelling, integrated offering to our wholesale and institutional investors in our targeted market sector,” Martin said.
