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Relative Return Podcast: Reaping the benefits of private markets exposure

Private markets in Australia continue to spark interest from investors as an alternative source of returns – Metrics’ Managing Partner Andrew Lockhart joined the Relative Returns podcast to explain why.

The real returns delivered by private debt in 2023 are testament to the investment case behind it. In this Relative Returns podcast, Metrics’ Managing Partner Andrew Lockhart makes an argument for more investors to consider adding an allocation to the fast-growing asset class to their portfolios.

He explains that private debt delivered higher total returns as interest rates rose over the year – outperforming more volatile asset classes. The inflation-adjusted income delivered by private debt and its reduced capital volatility proved a key attraction for investors as they sought to counterbalance fluctuations in equity and bond markets.

Opportunities to invest in private debt extend to retail investors – and Lockhart says Metrics has sought to structure funds with different return objectives and liquidity mechanisms to suit different risk tolerances. These include funds which cater to those looking for a defensive alternative to traditional bonds, through to funds which may be suitable for people seeking to replace a portion of their allocation to the equities market.

The podcast also examines the emergence of private real estate equity as an investment which may suit sophisticated or wholesale clients with significant sums to deploy. Lockhart explains that as Australia’s largest non-bank commercial property lender, Metrics Credit Partners is able to identify opportunities to participate in the equity or profits of a project or company. It’s real estate equity fund aims to deliver an internal rate of return that ranges from a minimum net 15% to potentially more than 20%. He argues that the greater degree of control afforded to private investors can create a greater confidence around the return profile than perhaps investing in public market equities.

Time stamps
0.17: Introduction
0:47: Metrics’ expertise
2:13: Why invest in private markets
3:47: How loan terms are struck
4:55: Typical borrowers
7:43: Retail investment opportunities
11:09: An alternative to shares or bonds
11:57: Higher total returns in 2023
14:34: How to use private debt in portfolios
17:30: Metrics’ history, size and scale
21:38: What is private real estate equity?
23:11: Target private real estate equity returns
26:52: Typical private real estate equity investments
29:44: Managing risk in private real estate equity
32:26: How to invest in private real estate equity
33:47: Benefits of diversification

Money Management | 4 December 2023