Readers of our columns over many years will have heard us talking about the importance of diversification. Whether an individual fund selecting its assets, or an individual investor selecting a wide array of investments to perform at all points across the economic cycle, diversification matters.
As the flagship manager in the Australian property credit sector, La Trobe Financial has grown to become a trusted partner, building the wealth of thousands of investors from Australia and around the world. Our investors make a strategically diversified allocation of their wealth to our investment products. Why? For access to low-volatility income products which aim to perform at all points across the economic cycle. We are proud that across each of our portfolio accounts, we have met this aim.
We recognise that our investors are faced with the challenge of asset selection and therefore diversification, every day. How your wealth is spread across a range of investment assets will ultimately determine the income and lifestyle outcomes through a hard-earned retirement, and it is crucially important to get them right.
The growth of investment assets in Australia
Australia has its own array of high quality, deep pools of investable assets. Consider successes within our technology and healthcare sectors in recent years. Paired with the growth of start-ups in financial technology, biotechnology, and software spaces, these burnish Australia’s reputation globally as a place of innovation, and also provide a rich array of assets for managers to place within portfolios for exposure to growth and income.
The growth in traditional asset classes of residential, commercial and industrial property cannot be overstated. The resilience of these sectors, again, provide a broad selection of assets for managers to select for portfolios which have the characteristics investors require: income, low-volatility and growth.
In an adjacent sector to property and real assets, it is hard to ignore the growth in infrastructure projects in recent years. The long-term nature of these projects, coupled with steady cash flows, presents opportunity for investors seeking income and growth over assets with pricing power, typically inflation responsive incomes and growth over a longer period of time.
Within Australia’s lending markets, the ongoing regulatory requirements imposed upon banks sees an increasing pool of high-quality, traditionally banking assets funded by a growing private credit sector. Whether this be secured property credit – the asset of choice for the La Trobe Australian Credit Fund – or within private credit to corporations, this asset class generates vast quantities of high-quality, investment grade assets. These assets are selected, and ultimately invested in by local and international investors for their low-volatility performance, delivered right across the economic cycle.
Wealth managers and investors are increasingly sophisticated
As the total pool of assets under management has grown alongside advancements in technology, the financial sector has become increasingly sophisticated. The delivery of products today versus 20 years ago, could scarcely be more different. It is expected as a minimum for all managers to maintain a modern, easy to use and well-designed online investment experience. Advancements in financial technology (FinTech) allow every day investors to engage, analyse, invest and report on a wide array of managers or strategies at the click of a button.
Accordingly, the growth of products and the rise in FinTech sees investors becoming more sophisticated. Consider the trend towards the establishment of Family Offices over the past five years, where affluent families pool resources to manage, preserve, and grow their wealth. Historically the domain of the ultra-wealthy, these operations incorporate wealth management, estate planning, and other related services.