Focus on the Signal, Not the Noise…

The United States and all its news, culture, entertainment, politics and business influences are never far from everyday life in Australia. From Black Friday sales and trick-or-treating on Halloween to nuclear-powered submarines and Netflix binges, American and Australian lives are deeply intertwined.

And, being the dominant global economy – or at least the largest in the world – what happens in America echoes in Australia. There is a never-ending torrent of US news, information and opinions coming at Australian investors. Just last month, a slew of economic data was released in the US – including updates on inflation, GDP growth, job numbers, consumer sentiment, the Federal Reserve’s decision, and who can forget the tariffs.

The challenge for Australian investors is this: while it sometimes feels like it belongs in the “too hard” basket, you simply can’t ignore the United States.  At 26% of global GDP, the United States’ economic gravity is simply too big and too strong to be ignored from your investment portfolio.

But with so much information flying around, it’s easy to feel overwhelmed.

That’s why at La Trobe Financial our investment strategy is built around cutting through the noise and focusing on the signal. We don’t chase headlines – we chase enduring performance. Rather than building products which react to every data point, we build investment products based on enduring thematics, high-quality assets, and long-term performance.

In a world of short-term reactions, we believe in long-term conviction: The US economy may be complex, but complexity doesn’t mean chaos. By staying grounded in fundamentals and filtering out the noise, we aim to position portfolios for sustainable performance – regardless of the latest twist in the news cycle.

So, What’s the Signal?

While headlines swirl around inflation, interest rates, and tariffs, there’s a quieter but more powerful story unfolding in the US – a bipartisan push to bring jobs and investment back to American soil, especially in the heartland: the US middle market.

In the first quarter of 2025 alone, over 173,000 new jobs were announced through reshoring and foreign direct investment (FDI), with 60% driven by reshoring. Notably, 90% of these jobs are in high or medium-high tech sectors, signalling a long-term shift in US industrial strategy.¹

States like Texas, South Carolina, Mississippi, and Michigan are leading the charge, benefiting from billions in corporate investment and government incentives. For example:

1. Apple has committed $600 billion over four years.²
2. TSMC is investing $100 billion in chip manufacturing.³
3. Hyundai is building a new steel plant in Louisiana as part of a $20 billion US expansion.⁴

This isn’t just corporate momentum – it’s policy-backed. The One Big Beautiful Bill Act, passed with bipartisan support, offers full expensing for domestic R&D and factory construction, plus tax relief for US-made vehicles. Meanwhile, the US Government’s Small Business Administration “SBA” Made in America Manufacturing Initiative is injecting billions into small manufacturers across key sectors like timber, energy, and steel.

Latest US Economic Signals

• Inflation is cooling but remains above target:
  • Headline CPI: 2.86%
  • Core CPI: 3.02%
  • Core PCE: 2.92%
• GDP rebounded in Q2 with 3.0% annualised growth, following a 0.5% contraction in Q1.
• Unemployment rose slightly to 4.2%, with job creation slowing.
• The Federal Reserve held rates steady at 4.25%–4.50%, but markets expect a rate cut in September, with futures pricing in a 60–87% probability.

What This Means for Australian Investors

The reshoring wave isn’t just a political talking point – it’s a structural shift. For Australian investors, it’s a signal to focus on the real economic drivers shaping US growth. Our La Trobe US Private Credit Fund (USPC) is built to capture these long-term trends, not chase short-term headlines.

Washington’s day-to-day may be unpredictable – but the USPC strategy is built with this in mind. We’re not taking equity risk, and we’re not approaching this with a tactical, short-term mindset. We’re strategically coupling our investment to a secular trend that will play out over decades, market cycles, and no matter who’s in the Whitehouse.

Noting all this noise, and all this signal, we have been very deliberate in our sector selection. The portfolio focuses on non-cyclical, service-based companies – businesses with lower capital intensity and less exposure to tariffs or global trade disruptions.  We focus on middle-market companies, the biggest beneficiaries of the generational tailwinds playing out in the United States.

And perhaps most importantly, we’ve stuck to our knitting. There’s been no mandate creep. The portfolio remains true to its original intent, and that discipline has been key to its resilience.

How Investors Are Using the La Trobe US Private Credit Fund

We’re seeing USPC used in a few different ways:

• As an enhanced income stream – a consistent and dependable source of yield in a world where that’s increasingly hard to find.
• As a defensive allocation – thanks to its low volatility and strong credit quality, it being uncorrelated to more turbulent equity markets.
• As a diversification tool – offering exposure to a different geography and a different part of the capital structure than traditional equities or bonds.

Advisers also tell us it gives them something differentiated to offer clients. It fills a gap in the market where investment products are either too conservative or too risky – and there aren’t many options that sit comfortably in the middle. This is a unique product, backed by two trusted names – La Trobe Financial and Morgan Stanley – and that combination has really resonated.

While the differentiated nature of the product is certainly an attraction, we understand that US Mid-Market Private Credit can be a leap for some investors. That’s why, as with all La Trobe Financial products, we provide complete transparency.

You can visit our website at any time to:

• Review the portfolio
• See how it’s tracking
• View the number of loans and maximum exposure per loan
• Drill down into US Mid-Market companies that we have provided funding to

And if that’s not enough, we’re here to help. Our asset management team are here to help you deepen your understanding of the La Trobe US Private Credit Fund or the portfolio driving its delivery of resilient income to investors.

In addition to investment performance, it’s this level of transparency and open communication that we believe helps investors feel confident and informed – making La Trobe Financial a long-term partner in delivering enhanced income you can depend on.