Australian investors are casting their nets wide in identifying opportunities for yield, new research by Nuveen has revealed.
In its second annual EQuilibrium Global Institutional Investor Study, Nuveen found that 73 per cent of Aussie investors intend to implement inflation mitigation changes in their portfolios.
But with traditional fixed income assets lacking in robust income in the era of rising inflation, the vast majority of investors (62 per cent) told Nuveen they are looking to alternative credit.
The percentage of asset owners who hold private credit increased exponentially, according to Nuveen’s survey of 700 global investors and 100 consultants in over 20 countries.
Following record year-on-year growth, now 72 per cent of asset holders hold private credit, compared with 62 per cent in 2020, and 31 per cent said they plan to increase assets over the next two years.
“Certain private credit is attractive to investors in Australia and overseas given the relatively higher spreads over public markets along with inflation protection via floating rates and covenant protection, yet generally exhibiting lower volatility relative to public markets,” said Andrew Kleinig, head of Australia at Nuveen.
According to the investment manager’s research, the most popular private credit investments were senior middle market debt (53 per cent), infrastructure debt (45 per cent) and real estate debt (38 per cent).
Australian investors were also interested in opportunistic private credit, with 60 per cent expressing a preference for this asset type, compared with 35 per cent of investors globally.
Nuveen also found that climate risk management was a top priority for Australian investors and their overseas counterparts.
The survey showed that 89 per cent of APAC investors were addressing or planning to address climate risk in their portfolios, while as many as 96 per cent of Aussie asset owners said they consider ESG factors in investment decisions.
“Our changing environment brings new opportunities and challenges for institutional investors. Australians have shown that they are willing and able to adapt and are already taking the lead globally on some measure,” Mr Kleinig concluded.
Maja Garaca Djurdjevic
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
