Investing in Aussies who work as hard as you

Are you seeing these alarming headlines from global consultancies? Some making the big claim that Australia will soon ‘enter a consumer recession.’

Really?

It’s like they know better than actual Australian consumers. 

From the indicators I see, Australians are buying and selling with terrific energy. They’re buying groceries for their families, grabbing flat whites with friends and, yes, meeting up at restaurants in town. 

I received a call one morning from a restaurant in the Sydney CBD recently — I was due to meet a mate there later for lunch. They are very busy. And they wanted to check if I was definitely coming, because the waiting list is stupendously long, and they don’t want to turn customers away. 

Is that a sign of a broad-based recession? 

Apart from anecdotal evidence about busy eateries, just look at the job posting numbers. Seek, Australia’s largest online recruiter, reported back on April 6 that job ads are 37% higher than they were before the pandemic. 

That should be a comfort for Australian investors. It is for me. I’m still optimistic about investing in 2023. However, I am adding a new asset class to my own portfolio — one that connects with the creative energy of Australian small business. 

Before I explain that, let me explain why some commentators are throwing around the R world. 

Multinational consultancies, with their HQ in London or Paris, are looking at indicators from the Northern Hemisphere, and feeding that into their algorithms. 

Meanwhile, Australians are feeding their families at night and, through the day, are working themselves to the bone. 

A great example is a brand new supermarket I heard about in one of those beautiful new suburbs on the outskirts of Brisbane. 

The owner paid for the fit out from his own pocket - but now he’s got a big problem. 

It’s not that there aren’t enough customers.

It’s that there are too many customers. 

Mums stocking up their larders. Dads planning for their first BBQ on that new Webber.

The only thing holding this hardworking Aussie business owner back is lack of capital. The bloke needs to stock up, and fast. 

Small businesses like this independent supermarket are the growth engine of Australia. They’re up late doing the books, and up early loading products onto the shelves. 

Not wanting to be rude, but these are the businesses who may have been let down by our banks. Shoppers want their groceries now. And our supermarket owner can’t wait six to eight weeks for a small loan approval to buy cartons of Weet-Bix and Bega cheese sticks.

This is a business that doesn’t need a lot of money. But they need it fast. Within 48 hours. For this business, the traditional banks can’t always meet that need. Fortunately, there are non-bank lenders offering private credit for the funding. 

Which brings me to the new asset class: Private Credit funds.

A Private Credit fund creates a pool of finance that businesses, like this supermarket, can apply for, quick smart.

The loans are small (the average is $99,747, but many are a few thousand dollars), short-term (40% mature after less than three months) and come with interest rates higher than regular bank loans (but since businesses like our supermarket owner want to pay it back quickly, the higher interest isn’t a great burden).

There are several Private Credit investment funds now in Australia, which, I think, are worth looking at carefully. If you have a financial adviser, you should certainly discuss whether it meets with your risk profile. With banks vacating the field for small to mid-size Australian corporates like independent supermarkets, demand for Private Credit is going up. But what excites me most about the category is it gives Australians who have worked hard, and saved hard, access to the kind of businesses led by the people who are driving the Australian economy forward.

You can learn more about the Private Credit fund that I’ve chosen to partner with in the information document here.