ASIC’s recent review and other headlines have raised concerns about transparency and risk management in Australian private credit funds, prompting advisers and clients to seek reassurance. At Perpetual Private, we believe our 1Income Opportunities Fund (IOF) offers a disciplined approach combined with global diversification. Here’s why:
- Low exposure to Australian Private Credit:
IOF’s allocation to Australian private credit is deliberately limited. Whilst we believe there are specific excellent investments in the Australian market, we also acknowledge that the Australian private credit market is predominantly focused on property lending, and many Australians are already heavily exposed to local property through their homes and other investments. Instead, IOF broadens its focus on global opportunities, partnering with experienced managers in larger, more established markets. This global approach, whilst not excluding specialised investments in the Australian market, provides greater diversification and access to managers with deep expertise in managing complex credit situations.
- Robust due diligence:
We conduct a comprehensive review of every manager and investment, assessing factors such as market opportunity, business model, team strength, investment process, risk management, strategy, and historical performance. We also evaluate their ability to manage defaults and recover value effectively. Our preference is for managers with strong credit terms, the resources to enforce them when necessary, and proven experience in handling workouts during previous market downturns.
- Portfolio construction for resilience:
IOF is a highly diversified fund – not just across regions, but also across types of defensive income producing investments, as well as varying the sources of underlying exposures and balancing across time vintages. The fund favours sponsor-backed loans (loans supported by private equity sponsors who provide additional oversight and resources) and senior-secured loans (loans that have first claim on a borrower’s assets in the event of default). These structures can offer stronger downside resilience. Over 90% of our corporate private debt investments (representing 60% of the total portfolio) are sponsor-backed, supporting higher recovery rates during market stress.
- Governance and transparency:
IOF is governed by a robust oversight framework. The fund is overseen by internal and formal governance committees which include senior investment leaders and independent members. These forums are responsible for analysing potential investments, approving final manager appointments, monitoring fund and manager performance, and ensuring compliance with investment strategies and regulatory standards. In addition, IOF maintains open and direct communication with its underlying managers. This means our team can quickly identify any emerging risks or issues, ensuring transparency and proactive management.
- ESG integration:
While not a Responsible Investment fund, IOF integrates environmental, social, and governance (ESG) factors into manager selection. As of September 2025, 86% of our underlying managers are UN PRI signatories.
In summary:
IOF is a truly diversified, defensive Alternatives fund with low correlation to traditional asset classes. By providing access to a broad range of opportunities globally and combining this with our disciplined approach and world-class manager selection, IOF aims to help smooth returns and reduce overall portfolio risk. We believe IOF is well positioned to deliver consistent income under varying market conditions.
Private credit investments carry risks, including default risk and liquidity constraints. These should be considered alongside potential benefits.
1Please refer to the IOF Product Disclosure Statement.