Super fund to increase allocation to private credit

Super fund Australian Retirement Trust (ART) plans to increase its allocation to private credit over the next 12 months.

In an interview with Bloomberg, ART head of investment strategy Andrew Fisher said the fund planned to increase its allocation to private credit from just over 1.5% of its portfolio to 2.5% over the next six to twelve months. The fund will target investments in Europe and North America utilising external managers as well as its internal team.

Fisher said the Brisbane-based industry fund was adopting a “disciplined” approach and would focus on the lower-risk segment of the unlisted credit market, vehicles offering credit to small-medium size businesses.

“There’s a lot of money chasing the space. We are competing with banks, which is why there is a tendency to be offshore, because the banks have a pretty dominant position here,” Fisher said.

Fisher was head of portfolio strategy at SunSuper before it was merged with QSuper to form ART in 2022.  

Other super funds are showing increasing interest in investing in private credit.

Cbus plans to triple its allocation to the asset class while Hostplus, is seeking to expand its already substantial private credit investments. In December, Australia’s largest super fund, AustralianSuper, announced a new partnership with private credit specialist Churchill Asset Management with an initial installment of $US250 million, intended to grow substantially over time. The partnership is investing in senior ranked loans and unitranch loans to private equity-backed US middle market companies.  

Churchill is an arm of Nuveen, the asset manager of TIAA, Teachers Insurance and Annuity Association of American-College Retirement Equities Fund.

Image: Australian Retirement Trust’s Brisbane headquarters.