With Trump's trade war rhetoric dominating the headlines recently, markets are reacting not just to interest rates and inflation but to renewed geopolitical and policy-driven uncertainty.
Equity markets have taken a hit. Volatility is surging. Investors are asking the same urgent question: Where can I find stability without sacrificing returns?
Even before trade war risks re-emerged, back in early 2022, Aura Private Credit began preparing for a downturn by shifting into a defensive posture. As the Reserve Bank of Australia started tightening policy to suppress demand, it became clear that equity markets were vulnerable.
Today, we are likely heading towards another shift. A round of interest rate cuts may be needed to combat weakening growth. If the trade environment continues to deteriorate under Trump-era policies, that pressure could increase.
But it is not just about watching rates. It is about spreads. When market uncertainty rises, credit spreads tend to widen. This gives investors an opportunity to earn higher returns, even if base rates fall.
The Aura private credit strategy aim remains simple: Preserve capital first. Pursue strong, risk-adjusted returns second. This is where private credit can play a valuable role in helping to buffer volatility in a portfolio.
Whilst institutional investors globally are increasing their exposure to private credit, some markets remain significantly under-allocated by comparison. Australia, in particular, has been slower to adopt private credit as a core component of portfolio construction.1 In contrast, Singapore is seeing growing interest from institutional investors, family offices and private wealth platforms. While allocations in Singapore are expanding, they still fall short of the levels seen in more established private credit markets such as North America and Europe.2
Private credit comes with risk, but it also comes with control when it is grounded in structure, security and careful underwriting.
Lending against high-quality assets such as property, receivables and business collateral helps secure the investment. Additional safeguards like director guarantees, fixed and floating charges, and warehouse financing add further layers of capital protection from the outset.
Applying a rigorous credit assessment process to every transaction is essential. In volatile markets, discipline and experience are critical.
The traditional model of 60 per cent equities and 40 per cent fixed income is showing its age. On volatile days, asset class correlations often break down and diversification becomes less effective.
That is why institutional investors and large endowments are introducing alternative sleeves into their portfolios. Private equity, venture capital and private credit are being used to help manage volatility and avoid mark-to-market risk.
Private credit is no longer just an alternative. In this environment, it is becoming a core component of a well-balanced portfolio.
At Aura Private Credit, our focus is on providing debt capital to Australian business lenders. We do not invest in consumer credit or offshore ventures.
The Australian private credit market is still relatively immature compared to Europe or the United States. This presents an attractive, underpenetrated opportunity.
As regulatory changes push banks to adjust their lending books, private credit is stepping in to support growth-focused businesses that need flexible capital solutions.
With Trump’s trade war rhetoric back in the headlines and traditional asset classes under pressure, the case for private credit has never been stronger.
For investors seeking resilience, income and diversification, private credit offers a compelling and timely opportunity.
Private Credit Strategy aims to : Preserve capital. Deliver strong, risk-adjusted returns. Navigate volatility with confidence.
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