Is longevity a risk management tool? Recent events remind us that the best ideas are enduring, and markets test every investment manager eventually.
Recent months have reminded investors of an enduring truth: markets test every strategy eventually. You may have watched individual investments react to volatility, or seen investment managers work through a shifting economic and regulatory backdrop.
True tests arrive unannounced. Some come in the form of economic shocks. We’ve seen volatility in markets through 2026, and recent negative movement in property prices, for example. Other tests can arrive through sudden regulatory shifts, with the Federal Budget in May an example of this.
Consider variously the tighter credit conditions, market dislocations, failure of individual sectors, companies, and borrowers as more examples of tests which have needed to be navigated through recent years.
The Lindy Effect: what endures tends to endure
Among the recent headlines in Australian credit, one aspect which has stood out has been that some managers experiencing the greatest challenges are also among the sector’s newer entrants. It’s an observation which brings to mind a concept sometimes referred to as the Lindy Effect.
The Lindy Effect is the simple notion that the longer something has existed successfully, the longer it will continue to exist. An investment strategy which has endured multiple market cycles has demonstrated a resilience that newer strategies have not had the opportunity to prove. A company that has operated for over 70 years, for example, has survived business and economic events which put others out of business.
But longevity is not about resting on one’s laurels. It’s no guarantee for future success. But it does provide evidence of surviving real-life events.
Consider La Trobe Financial.
Founded in 1952, the business has navigated 74 unbroken years of changing property markets, recessions, regulatory reforms, inflationary events, de-regulation, the GFC, a pandemic, and numerous interest rate settings. Our policy manuals have been road tested through real-world market cycles and continually refined over time.
And since entering retail asset management in 1989, we have acted as cautious stewards of investor capital across generations of investors, continually refining our processes, strengthening our risk frameworks, and expanding our investment capabilities. We are grateful for the trust investors have placed in us over that time, and we remain focused on earning that trust every day.
Time in the market has additional benefits.
Why scale and liquidity matter
Consider the benefit of scale. By building slowly over time, cautiously and carefully, we have grown to now manage over $25 billion in assets. This scale provides access to more lending opportunities. It allows larger research and investment teams. It allows for stronger governance frameworks and greater portfolio diversification. It creates flexibility during periods when markets become more challenging and allows risks to be spread across deep, mature funding options.
Liquidity benefits too. The real test for liquidity is when market conditions turn. Across our retail asset management business, every investor in the La Trobe Australian Credit Fund’s pooled investment accounts, such as the 12 Month Investment Account, has received their maturity redemptions as requested, on time and in full. How? We have developed time-tested, deep and robust liquidity frameworks overseen by our Chief Liquidity Officer. When the GFC froze funds across mortgages and property around 2008-2009, we had already been in retail asset management for 20 years. All of our scheduled liquidity redemptions in our pooled accounts were made on time, and in full.
Together, experience, scale, and liquidity help create resilience. And when markets become unsettled this resilience really shines.
What this means for investors
The lesson from recent market volatility and events is not that investors should fear what is newest, or even that older organisations are superior. It is that investment managers should be judged not only by the returns they seek to deliver, but the underlying strength of their systems, processes and disciplines as a proxy for their resilience. Because history tells us that uncertainty will always return.
La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Credit Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321.
Any Financial product advice is general only and has been prepared without considering your objectives, financial situation or needs. You should, before investing or continuing to invest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and consider the Product Disclosure Statement for the fund.
Past Performance is not a reliable indicator of future performance.
