ETFs in, private credit out for self-directed investors
Australian self-directed investors are demonstrating a move back to safety with ETF allocations rising and private credit falling out of favour.
According to latest data from InvestmentMarkets covering the last four months, ETFs now account for 21 per cent of its platform traffic while global equities account for 20 per cent.
This reflects broader ETF growth with Betashares reporting ETF funds under management (FUM) in Australia gained $4.5 billion in new capital in February to bring total FUM to $343 billion. Global equity ETFs captured the largest portion at $1.92 billion, or 43 per cent of the total monthly flows.
InvestmentMarkets CEO Darren Connolly said investors’ preferences had “changed markedly” over the last few months with ETFs and global equities now beating property and private credit.
Property funds, mortgage funds, diversified income and private credit previously occupied four of the top five spots a few months ago and the decline in interest for private credit has been “particularly sharp”, dropping 26 per cent over just four months.
“Investor behaviour on our platform tends to be a leading indicator of broader sentiment shifts. The move towards a more global orientation, irrespective of structure isn’t a huge surprise, but the speed of the rotation – and the sharp decline in private credit in particular – suggests investors are making some significant calls in a short period of time.”
Alternative assets – including commodities, gold, resources, and infrastructure – have recorded the fastest growth on the InvestmentMarkets platform, up 54 per cent.
Private credit has come under scrutiny in recent weeks after a number of high-profile funds placed redemption limits on their funds. This includes funds offered by BlackRock, Apollo and Ares as well as Blackstone’s BCRED which is the largest private credit fund in the world at US$83 billion ($120 billion).
This is leaving investors cautious about investing as they run the risk of being unable to quickly redeem their funds if a fund opts to gate its assets.
A second factor is the lack of transparency for wealth investors, especially in the event of a market downturn. In many cases, local distribution staff on the ground in Australia may have limited information themselves and it can take weeks to get an answer from their headquarters.
