Strength amid noise

While the US political landscape continues to influence markets, the nation's private credit opportunities remain robust, even in volatile sectors like technology.

- 

Despite a constantly shifting political landscape, US private credit is still an attractive option for investors looking to break into the sector, according to La Trobe Financial chief investment officer Chris Paton.

Having launched the La Trobe Financial US Private Credit Fund (USPC) around two years ago, the group has seen a lot of success.

"Performance has been very pleasing and exactly as the strategy was designed. The portfolio has traded with minimal volatility, which reflects the deliberate construction of the fund," Paton says.

"We've met our income targets every month since inception. All investor withdrawals have been processed in full and on time. And the FX hedging program has delivered as expected."

Paton believes this is because the underlying portfolio exhibits the investment fundamentals La Trobe Financial focuses on, like always investing in high quality assets with a bias against borrowers in cyclical sectors or which are capital intensive, and diversification, with the portfolio consisting of 127 loans across 33 industries.

"With no single borrower representing more than 2.8% of the portfolio, that granularity is a major contributor to the fund's consistency and resilience," he says.

This helps the fund weather any potential political storm that could impact other asset classes.

"We're not taking equity positions, and we're not betting on short-term macro moves," Paton says.

"The bipartisan commitment to revitalising Middle America - through investment in manufacturing, infrastructure and essential services - that remains intact regardless of the administration in office."

Paton adds that the fund maintains strict sector discipline by avoiding cyclical sectors.