NEWS
2 Mar 2026 - Data demand heats up
26 Feb 2026 - How investors can still ride the gold surge
How investors can still ride the gold surgePendal February 2026 (5 minutes read time) |
|
GOLD and silver prices have been riding a rollercoaster since the start of the year, but Pendal portfolio manager Brenton Saunders -- who has worked as a geologist -- argues there are still plenty of opportunities in midcap equities exposed to these metals. Total gold demand in 2025, including over-the-counter sales, exceeded 5,000 tonnes for the first time, according to the World Gold Council (WGC). Last year, the safe-haven metal set 53 new all-time price highs which yielded an "unprecedented value" of US$555 billion - a 45 per cent year over year increase, WGC data shows. The reason: heightened investment activity driven by safe-haven and diversification moves that culminated in the second strongest year on record for exchange traded fund-inflows and elevated central bank buying. Although central bank purchases slowed from their recent pace, they hit the upper end of the WGC's forecast, totalling 863 tonnes for the year. Bar and coin buying also reached a 12-year high. This led to the gold price marking its highest annual average at US$3,431 an ounce - a 44% spike year over year. "Central banks have been buying it hand over fist; retail investors have been buying it hand over fist, the dollar has been weakening, and geopolitics have been pretty elevated," explains Saunders, who manages Pendal's MidCap Fund. "If you go back to the late 90s/early 2000s central banks were all selling gold. It was an old asset. Nobody needed it anymore. It was defunct," explains Saunders. "Most of the OECD countries sold most of their gold reserves. The US was probably the only one that didn't. "But now you've seen a very broad-based and especially emerging market purchase of gold. So it's re-legitimised gold in a major way in terms of its role as a reserve asset the world over." Silver, meanwhile, is also a beneficiary of the market ructions, hitting its highest point on record in late January when it rose above US$120 an ounce. An additional key driver of the recent price surge in gold's poorer cousin is the high demand for silver as an industrial metal input for solar panels. "We now use a lot of it, especially in solar panels," says Saunders. "That's probably the biggest industrial use for silver now, but it's always been a second-tier reserve currency investment product that has done the rounds. "So it's move more recently is obviously being helped by the fact that solar manufacturing is still elevated and now we've seen some investment demand come to the fore." But while gold and silver prices have run hard, this hasn't necessarily been reflected in the share prices of gold and silver stocks. 'Scepticism gap'Saunders points to the 'scepticism gap' between the price of the physical metals versus the equities exposed to them. "Because the move in the gold price has been so rapid the market has been highly sceptical of pricing in that scenario because they're constantly questioning what will happen if the gold price comes back. "So the equities, not just gold equities but especially in gold, have been quite reticent to reflect in their share prices the full move in the gold price." However, Saunders argues that the price could drop by US$1,000 and still be at a "bonanza level", meaning gold-exposed companies "could weather quite a big correction in the gold price without much impact to the value of the company's operational considerations". A "bonanza-level" gold price affords operations more flexibility, allowing them to mine areas that historically were not economic to consider. This increases reserves and profitability. "That is the one thing that gives me a bit of comfort, and I think investors ultimately a bit of comfort," says Saunders. "If I look at consensus earnings for gold companies, they're still reflecting a significantly lower gold price than prevails today. "So that should mean if the gold price stays at the current level, we'll continue to see earnings upgrades and that normally underpins share prices. "Those are the things that make me hopeful that it should still be a fairly constructive sector from an investment perspective." |
|
Funds operated by this manager: Pendal MicroCap Opportunities Fund , Pendal Global Select Fund - Class R , Pendal Sustainable Australian Fixed Interest Fund - Class R , Pendal Focus Australian Share Fund , Pendal Horizon Sustainable Australian Share Fund , Regnan Credit Impact Trust Fund , Pendal Sustainable Australian Share Fund , Pendal Sustainable Balanced Fund - Class R , Pendal Multi-Asset Target Return Fund |
|
This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current as at December 8, 2021. PFSL is the responsible entity and issuer of units in the Pendal Multi-Asset Target Return Fund (Fund) ARSN: 623 987 968. A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com. The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund. An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested. This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient's personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation. The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information. Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance. Any projections are predictive only and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com |
25 Feb 2026 - The rise of grounded sustainability and why it's here to stay
|
The rise of grounded sustainability and why it's here to stay abrdn February 2026 (4-minute read) In the five years since the Glasgow-based COP26, sustainable investment initially surged. Expectations were high, pledges were ambitious, and many believed capital markets could play a decisive role in addressing climate change and broader environmental and social challenges. But more recently, geopolitical shocks, legal scrutiny and market realities have tempered that optimism. In its place, a more durable approach is emerging, which we describe as grounded sustainability. It's a framework for incorporating sustainability factors into investment decisions, where those factors are financially material and aligned with client mandates. It's evidence-led and recognises inherent trade-offs. Importantly, it's clear about the limits of what investors and companies can achieve within the constraints of public policy. Mandates and market realitiesOver the past five years, conflicts, the global energy crisis, and the resurgence of populist politics have created a more fragmented, unpredictable and idiosyncratic environment. For example, coal use rose during the energy crisis, even as renewable deployment consistently exceeded expectations. This highlights the growing regional and thematic divergence. With this complex backdrop, sustainable investment must balance long-term systemic goals with the constraints imposed by mandates, markets and regulation. Ambition alone isn't enough. It must be combined with pragmatism. Importantly, it must also align with clients' financial objectives and constraints, otherwise commitments risk becoming empty promises - or worse, reputational liabilities. Climate law gets real: from global duties to corporate liabilityLegal frameworks are catching up with climate ambition. The International Court of Justice's (ICJ) recent advisory opinion [1] clarifies that states have a legal duty to prevent environmental harm, including to the climate system. It also clarifies that a lack of regulation doesn't absolve other actors - whether companies, asset managers or investors - from managing foreseeable risks. This shifts climate accountability from voluntary action to legal risk. Policy as a catalystThis is where effective policy matters. Recent European initiatives to align climate objectives with industrial competitiveness and energy security reflect growing recognition that markets alone cannot deliver the transition at scale. Together, they signal a shift from fragmented initiatives to coordinated, state-backed action, while offering companies and investors the long-term policy clarity that has been missing. This is why we are calling for greater long-term policy certainty, which retains strategic intent while limiting unnecessary complexity. This is the essence of grounded sustainability: integrating environmental and social factors when they are material to value, and doing so with clarity, discipline, and alignment to mandates. What does this mean for investors?Sustainability concerns need not be sidelined in financially focused mandates. Forward-looking considerations of material environmental and social risks are fully consistent with long-term value creation. What cannot be justified is pursuing sustainability outcomes that are disconnected from financial objectives, unless explicitly agreed with clients. This is the essence of grounded sustainability: integrating environmental and social factors when they are material to value, and doing so with clarity, discipline, and alignment to mandates. Policy is the missing link. Without it, companies struggle to act without breaching fiduciary duties or losing market share. With it, sustainability themes become investable, scalable, and defensible. Looking forwardWe expect that the rise of climate risks - coupled with increasing energy and mineral demands to facilitate technology advances and the energy transition - will mean that sustainability themes will remain at the heart of many geopolitical tensions. This will apply whether they are presented as energy transition, resilience or strategic government objectives (such as economic competitiveness or national security). Overall, we expect the policy landscape to remain uneven, with less support than previously. But where outcomes align with strategic government objectives, policy support will surely follow. Final thoughts...A recalibration is needed to find an equilibrium, where sustainability is seen as a fundamental tool for making better investment decisions, rather than being wrapped up in unrealistic expectations. The sector needs to evolve from idealism to pragmatism, grounded in legal clarity, mandate alignment and financial materiality. Despite the potentially gloomy outlook, we've seen record investment in the energy transition - twice as much as in fossil fuels. So it's not about abandoning sustainability themes. Rather, it's about doing it deliberately and within real-world constraints. |
|
Funds operated by this manager: abrdn Sustainable Asian Opportunities Fund , abrdn Emerging Opportunities Fund , abrdn Sustainable International Equities Fund , abrdn Global Corporate Bond Fund (Class A) |
24 Feb 2026 - 2025 Responsible Investment and Stewardship Report
23 Feb 2026 - Australian Secure Capital Fund - Property Update
|
Australian Secure Capital Fund - Property Update Australian Secure Capital Fund February 2026 (1-minute read) House prices bounced back in January after a slower December, rising by 0.8% nationally. After slight falls last month, values in Melbourne and Sydney rebounded, while Brisbane, Adelaide, Perth, and Darwin all saw increases of 1.2% or greater. More broadly, the national median dwelling value surged by 9.4% over 2025--almost double the 4.9% national rise seen in 2024. Regional markets outperformed capital cities with a 10.3% annual rise and 1% monthly rise, compared to 9.2% and 0.7% rises, respectively, for the capitals. Across the capital cities, house values in the lower quartile increased by 1.3% in January, compared to a 0.3% rise in the upper quartile.
Source: Cotality HVI, 02 Feb 2026 February Edition Funds operated by this manager: ASCF Select Income Fund , ASCF High Yield Fund , ASCF Premium Capital Fund , ASCF Private Fund
|
19 Feb 2026 - Volatility providing fertile ground in active credit
|
Phil Strano: Volatility providing fertile ground in active credit Yarra Capital Management February 2026 In this instance, the direction change is Australia's late 2025 bond selloff, culminating in a 25bp hike from the RBA this week and with the prospect of more hikes through 2026. Looking forward, current market pricing for 2026 shows a widening gap between the RBA cash rate and the FED funds rate, with the pricing of rate hikes in Australia in stark contrast to the US where easing appears virtually certain (refer Chart 1). Chart 1: Cash Rate Futures - US and Australia (%)
Source: Bloomberg, Yarra Capital Management Feb 2026.While the year ahead can pan out differently since actual movements in interest rates in some instances can bear little resemblance to the futures market at any point in time, pricing is always eventually reflected in security valuations across Australian credit and thus impacts investment decisions. For us, higher bond yields in the closing months of 2025 enabled a rebuild of strategic duration at ~1.7 years across both our Enhanced Income and Higher Income strategies. While market timing is never perfect, this duration positioning - where we have a skew to the front end - should help limit any drawdowns from risk offs in 2026. This period reminds us of April 2025, where both strategies generated positive performance despite credit spreads moving materially wider. We believe a similar scenario can play out in 2026 (refer Chart 2). Chart 2: Australian 3-year Interest Rates and ANZ 2033/38 T2 Credit Spreads
Source: Bloomberg, Yarra Capital Management Feb 2026.Another key theme through 2025 was the 6%+ "mania" which appears to be back with gusto. A pool of investors attracted to higher outright yields, especially longer dated major bank T2s, appear to be forgoing adequate credit spread compensation and happily accepting higher spread and interest rate duration risk to achieve their 6%+ yield objectives. Our analysis of the ANZ T2 credit curve illustrates the poor credit spread compensation that is currently on offer for the longer dated 2035 (call) and 2045 (bullet) maturities (refer Chart 3). Chart 3: ANZ T2 $A Securities Credit Spreads and Government Bond 10-year Yields
Source: Yarra Capital Management Feb 2026.Unsurprisingly, the significant contraction in the credit spreads on longer dated T2s is closely correlated with the rise in government bond yields and ANZ's T2 credit curve, as with the other major banks, is unattractively flat. We have taken this opportunity to rotate out of these longer-dated T2s given the inadequate spread compensation, preferring instead to be invested in shorter dated T2s such as the 2030s which are paying comparable credit spreads but with much less risk. While we are rotating out of longer-dated T2s, we remain comfortable investing in longer dated securities provided the credit spread compensation is commensurate to the risk assumed. In early February, we invested in the 5 and 10-year BBB rated Aroundtown bonds. While these securities are more off Broadway than the major bank T2s, the 10-year securities priced at an attractive 200bps credit spread and a yield of 6.72%. This deal provided ~70bps additional compensation for two notches lower credit quality (i.e. approximately double the normal compensation over A- rated major bank T2s). |
|
Funds operated by this manager: Yarra Australian Bond Fund , Yarra Australian Equities Fund , Yarra Emerging Leaders Fund , Yarra Income Plus Fund , Yarra Enhanced Income Fund , Yarra Australian Smaller Companies Fund , Yarra Ex-20 Australian Equities Fund , Yarra Global Small Companies Fund , Yarra Higher Income Fund |
18 Feb 2026 - Australian economic view - February 2026
|
Australian economic view - February 2026 Janus Henderson Investors February 2026 (7-minute read) Market reviewSolid domestic data contributed to reinforcing near term lift in yields. The Australian bond market, as measured by the Bloomberg AusBond Composite 0+ Yr Index, rose 0.21%. The Reserve Bank of Australia (RBA) did not meet in January, therefore the cash rate remained at 3.60%. Three-month bank bills rose 10 basis points (bps) to 3.84% by month end. Six-month bank bill yields fell 3bps to 4.09%. Australia's three-year government bond yields ended the month 13bps higher, at 4.27%, 10-year government bond yields were 7bps higher at 4.81%. January was an extraordinary month in terms of global, geopolitical events and central bank uncertainty. From the US demanding Greenland, to ousting the Venezuelan leader, and instigating a criminal probe into Federal Reserve Chair Powell. What is more remarkable is the market's mostly benign response to the newsflow. Amid a general level of uncertainty, demand for assets continues to outweigh any potential global blowback. Peripheral markets are showing the impacts, volatility in gold and silver prices and a weakening US dollar are key indicators of that unease. While these broad events are ongoing, providing a backdrop to the domestic market, at this point, they are not driving them. The local economy shows elevated inflation, with the RBA's main measure, the trimmed mean quarterly series, at 3.4%yoy. The new monthly headline series remains at 3.8%. A series of administrative prices and one-offs have driven the headlines. Underlying this is steadying energy and rent prices, proving some degree of comfort ahead. The labour market remains highly volatile, with large changes month-to-month. The unemployment rate has dropped to 4.1%, but employment growth is low. Consumer confidence has dropped on the prospect of higher interest rate increases, while major city house prices are similarly subdued. A case for RBA hikes can be made this year. The upcoming artificial intelligence (AI) related capital expenditure cycle is expected to contribute significantly to demand and come up against supply constraints. Much of this comes in H2 and beyond. Initially, the household sector remains sensitive but should stabilise. Risk markets continued their solid momentum into 2026. Domestically, corporate and structured credit primary markets opened strongly with a range of issuers issuing bonds. Against a broadly constructive background for credit, the Australian iTraxx Index closed 2bps wider at 66bps, while the Australian fixed and floating rate credit indices returned +0.32% and +0.46% respectively. Market outlookWe have updated our RBA base case, looking for a series of hikes through 2026, into 2027. While our hikes are later than current market pricing, they move higher than that priced into 2027. Our high case is one where inflation remains elevated and the RBA are forced to raise interest rates more than expected in H1 2026, continuing higher through the year and into 2027. This has a 10% weight. Our low case reflects a weaker economic outcome, if global uncertainties are renewed and the labour market deteriorates. We hold a modest long duration position, targeted on the curve, and remain vigilant to take advantage of market mispricing. Monthly focus - Make way for AI InvestmentThe AI investment boom is upon us, we knew it was coming but the third quarter of 2025 showed that its appearance was perhaps sooner than expected. The trajectory is by no means guaranteed. There is a desire by policy makers, and players alike, to facilitate progress but some perspective on quantum, and constraints, provide a useful guideline to the path ahead. The AI sector influence on the economy initially shows up in investment. The productivity enhancements come later. Australia is seen as having a comparative advantage in terms of global geopolitics, economic conditions and availability of renewable energy sources. Given this, it is reported that the build and placement of data centres (DC) in Australia is higher than in comparative countries. Australia will benefit from setting up DC in Australia that service both local and non-Australian clients. The rise in DC building has been dramatic. This captured economist's attention in the third quarter data set, surging ahead. To Q3 2025, per quarter, actual building steadily rose at A$1.1bn, starts have surged to A$2.4bn but all eyes on the work yet to be done (WYTBD) at A$7.3bn. WYTBD are committed, approved developments that are expected to proceed in the next year. While not all will go through, a significant proportion is expected to be developed. The Q3 data for starts is also indicative of the possible pathways. It may not be a smooth process; delays can be expected. These represent a powerful rise in the sector. Mapped against the overall economy though, it may be smaller. The datacentre WYTBD is around 0.25% of nominal GDP at this stage. There have been numerous announcements regarding the pipeline for DC build commitments that will not be in the official ABS data.
If we assume the A$7.6bn increase, then deflate by target inflation, the rise in real private non-residential capital expenditure is an admirable 20%. Assuming it isn't implemented all at once and smooth the spend over multiple years, this would imply an approximate 0.4 percentage point rise in the contribution to real GDP per year. This is not to be ignored, but equally it doesn't suggest another boom period. However, if the media announcements are to be believed, there is a long-term pipeline of around A$150bn. If, and this is a big assumption, this comes about, then there could be a significant contribution to real GDP over a decade. This includes spending on the inputs, such as energy and water, as well as software. There are challenges to the projected implementation of datacentre construction. There has been a crowding out of construction as the public sector utilised available labour and inputs to building, creating roadblocks to rapid build out in the private sector. This will ease as the public build moderates. Energy and Transmission Energy is significant for DC and AI. DC are energy intensive and have huge energy, and thus transmission, needs. Increasingly, DC are saying they will provide their own energy, predominantly through renewables. The electricity building on WYTBD is larger than that of DC, and while AI and DC are a large part of this, the changing needs of the entire energy sector is also behind the ramp up. The WYTBD now equates to just shy of 3% of GDP on a nominal basis. Much of the acceleration since 2024 has been in the public sector, while private plans have been flat, after a sharp rise though 2022-2023. That will need to change if private energy generation is to be used to meet the new AI needs. Given the increasing focus on the social aspect of energy, and water, usage, often referred to as the energy trilemma of reliability, affordability and sustainability, combined with tight supply and rising costs, it should be expected that heavy users such as DC, and others, will meet their energy needs outside of the public provision. This can be represented as a capital expenditure tailwind, or an investment headwind. It is likely there is a bit of both. Some investors will be able to go ahead with private access to their energy, and water, needs. Others will see the costs, delays and social license as too high a barrier. Spending on actual AI itself will likely increasingly factor into the equation. Overall software spend has already surpassed the late 1990's boom and should further increase. As AI becomes cheaper per user, and other versions appear, this growth may slow. The generalised rise in overall spend thus far is also likely to represent the increased digitisation of lives and workforces that was already underway. AI adds to this. We would consider the contribution to growth to maintain on a steady path from here. Views as at 1 February 2025. |
|
Funds operated by this manager: Janus Henderson Australian Fixed Interest Fund , Janus Henderson Conservative Fixed Interest Fund , Janus Henderson Diversified Credit Fund , Janus Henderson Global Natural Resources Fund , Janus Henderson Tactical Income Fund , Janus Henderson Australian Fixed Interest Fund - Institutional , Janus Henderson Conservative Fixed Interest Fund - Institutional , Janus Henderson Cash Fund - Institutional , Janus Henderson Global Multi-Strategy Fund , Janus Henderson Global Sustainable Equity Fund , Janus Henderson Sustainable Credit Fund All opinions and estimates in this information are subject to change without notice and are the views of the author at the time of publication. Janus Henderson is not under any obligation to update this information to the extent that it is or becomes out of date or incorrect. The information herein shall not in any way constitute advice or an invitation to invest. It is solely for information purposes and subject to change without notice. This information does not purport to be a comprehensive statement or description of any markets or securities referred to within. Any references to individual securities do not constitute a securities recommendation. Past performance is not indicative of future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Whilst Janus Henderson believe that the information is correct at the date of publication, no warranty or representation is given to this effect and no responsibility can be accepted by Janus Henderson to any end users for any action taken on the basis of this information. |
fashion, driven by geopolitical concerns over Greenland,
Venezuela and Iran. (2-minute read)
17 Feb 2026 - Glenmore Asset Management - Market Commentary
|
Market Commentary - January Glenmore Asset Management February 2026 (2-minute read) Global equity markets kicked off the new year in volatile fashion, driven by geopolitical concerns over Greenland, Venezuela and Iran. This provided a boost to Resources, which drove the ASX All Ordinaries Accumulation Index up +1.6% for the month. This represented a slight outperformance vs the S&P 500, which rose +1.4%. However, the NASDAQ underperformed most global benchmarks (+0.9%), as fears over disruption caused by Artificial Intelligence (AI) weighed upon the Tech sector. Outside of the US, the FTSE 100 and Euro Stoxx 50 continued their strong run, rising +2.9% and +2.7%, respectively. The ASX experienced a particularly volatile month, which was more pronounced in the small-cap segment of the market. Energy and Gold were the strongest performing sectors, whilst Technology was the weakest performer, impacted by concerns about AI disruption. During the month, the ASX Small Ordinaries Accumulation Index rose +6.0% at its peak, before falling over -3% in the final week of the month, to finish +2.7% higher. In addition to the factors noted above, we believe the small-cap segment was disproportionately impacted by two events, being (1) stronger-than-expected Australian inflation data, which supported the RBA's subsequent February 2026 rate increase, and (2) a sharp reversal in commodity prices following the appointment of Kevin Warsh as the new Governor of the US Federal Reserve. Regarding monetary policy in Australia, the market expects 1- 2 more RBA rate hikes over the next 12 months. In bond markets, the US 10-year bond yield rose +7 basis points (bp) to 4.24%, whilst its Australian counterpart rose +7bp to 4.81%. The Australian dollar had a strong month, rising +4.4% to US$0.70, implying an increase of 2.9 cents. Funds operated by this manager: |
16 Feb 2026 - 10k Words | February 2026
|
10k Words Equitable Investors February 2026 (2-minute read) Precious metals reacted savagely on the Kevin Warsh Fed Chair nomination. The "AI" capital drain bites for hyperscalers at the same time AI's rapidly improving capabilities bites for technology services. Government bond yields have been rising with low volatility amid broader market gyrations. Those gyrations were most apparent in the worst week since Covid-19 rocked markets in 2020 for Australia's small resources and large IT stocks. Valuation metrics in US tech - and software in particular - have taken a haircut. Regime change is apparent with the majority of stocks outperforming rather than the market being led by a few key stocks - both in the S&P 500 and among Australia's small caps. There is a huge dispersion in valuations among small caps to play with. Finally, US Office CMBS delinquency rate spiked to a record 12.3%! The "Warsh Effect" dents Gold and Silver price performance over past five years 
Source: Equitable Investors, Koyfin "AI" divergence - market punishing MSFT for high capex 
Source: Equitable Investors, Koyfin Capex as % of operating cash flow for "hyperscalers" (MSFT, AMZN, GOOGL, META, ORCL) 
Source: Bank of America Global Research Hyperscaler's combined capital expenditure in US dollars 
Source: Bloomberg India's IT services giants sold off on fears of IT disruption 
Source: Equitable Investors, Koyfin US 10 year bond yield relative to MOVE Index of implied bond market volatility; and Equitable Investors' Bond Market Sentiment indicator 
Source: Yale, Equitable Investors Aus 10 year bond yield relative to realised volatility; and Equitable Investors' Bond Market Sentiment indicator 
Source: RBA, Equitable Investors Largest weekly precentage falls for three S&P/ASX indices 
Source: Iress, Equitable Investors Impact on ASX small caps from factor shocks - implied by historical performance relative to proxy ETFs 
Source: Equitable Investors Recent pull-back in US tech EV/EBITDA multiples 
Source: Koyfin, Equitable Investors US Software sector median EV/Revenue multiple 
Source: Altimeter Surge in % of S&P 500 companies beating the index 
Source: Ned Davis Research via The Kobeissi Letter A regime shift with a surge in the percentage of stocks in the S&P/Small Ordinaries Index that outperformed the market cap weighted average return 
Source: Koyfin, Equitable Investors Dispersion of valuation multiples among US and Australian small caps 
Source: Koyfin, Equitable Investors US Office CMBS delinquency rate spikes to record 12.3% 
Source: Trepp via WOLFSTREET.com Funds operated by this manager: Equitable Investors Dragonfly Fund Disclaimer Past performance is not a reliable indicator of future performance. Fund returns are quoted net of all fees, expenses and accrued performance fees. Delivery of this report to a recipient should not be relied on as a representation that there has been no change since the preparation date in the affairs or financial condition of the Fund or the Trustee; or that the information contained in this report remains accurate or complete at any time after the preparation date. Equitable Investors Pty Ltd (EI) does not guarantee or make any representation or warranty as to the accuracy or completeness of the information in this report. To the extent permitted by law, EI disclaims all liability that may otherwise arise due to any information in this report being inaccurate or information being omitted. This report does not take into account the particular investment objectives, financial situation and needs of potential investors. Before making a decision to invest in the Fund the recipient should obtain professional advice. This report does not purport to contain all the information that the recipient may require to evaluate a possible investment in the Fund. The recipient should conduct their own independent analysis of the Fund and refer to the current Information Memorandum, which is available from EI. |
12 Feb 2026 - Australian and New Zealand Private Debt Market Quarterly Review
|
Australian and New Zealand Private Debt Market Quarterly Review Revolution Asset Management January 2026 (8-Minute Read) |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Market overview The year 2025 ended with a continued constructive tone across all investment asset classes, with a 'risk-on' sentiment that was consistent for much of the year. Volatility was largely contained, punctuated only by a handful of brief dislocations - the most notable occurring during the Liberation Day tariff period. The broad-based rally has continued with record highs being tested in equities, precious metals, credit spreads and real estate valuations through the back end of 2025. In interest rate markets, there seems to be an emerging disconnect between the trajectory of the US versus other developed markets. In the US, inflation has yet to pick up and the economy continues to grapple with cost-of-living pressures. By contrast, the UK, Canada and Australia have all witnessed a significant uptick in inflation. This translates into potential interest rate cuts in the US (aided by US President Trump actively lobbying the US Fed) compared to other developed world central banks commencing or looking to hike interest rates to tame inflationary pressures. This backdrop has led to the weakening of the US dollar and the so-called 'de-dollarisation', as leading market commentators increasingly question the durability of the US dollar's status as the world's reserve currency. Closer to home, the RBA at the conclusion of 2025 signalled to the market that interest rate cuts previously factored in for 2026 were off the table, following a surprisingly high inflation reading of 3.8% in December. In fact, many economists were forced to backflip from their previous vocal rate cut calls to then predict multiple interest rate hikes this year. In the most recent January CPI monthly reading, inflation has moderated to 3.4% which has tempered rate hike expectations, with the market now predicting an almost certain 25 basis points (bps) rate hike by August 2026. The RBA ultimately has time to assess whether inflation will come into its target 2-3% band over the next few months, before having to make any decision to adjust the current cash rate of 3.6%. From Private Equity to Private Credit: A Market TransformationAs we enter the new year, it is worth reviewing the continued development of the private credit market globally. From humble beginnings, there has been nothing short of an explosion in private credit. According to Preqin, the private credit market has risen from US$250 billion in 2007 to a staggering US$2.5 trillion, globally. This phenomenon is best illustrated by the largest private equity firms, many of which now operate substantial private credit operations, often with more assets under management (AUM) in credit than in private equity. As an example, Apollo Global Management has a significantly larger private credit AUM of US$690 billion compared to its private equity AUM of US$150 billion. Ares Management, Blackstone, Brookfield, and KKR also share this trait, having substantial private credit businesses that rival or exceed their private equity AUM, as shown in the chart below. These once celebrated and successful private equity managers have effectively morphed into major private credit firms. The principal reason for this has been the attraction of a more conservative asset class, where scale allows these firms to underwrite and hold whole loans that would have previously been financed by banks or the broadly-syndicated loan/CLO markets. The Largest Private Equity Firms Have Become Major Private Credit Players
Source: Gain.pro and public filings. Analysis excludes infrastructure and real estate funds but includes secondaries. As the private credit market continues to mature, it is fair to say that there has been a permanent shift away from banks being traditional lenders to companies �' from middle market size all the way through to the very largest privately owned corporates. At the same time, there has been an absence of a meaningful recession (negative COVID-related impacts were short-lived thanks to co-ordinated fiscal and monetary policy stimulus) which has supported consistently robust returns in private credit, with little dispersion between top and bottom quartile managers. This has fuelled the growth in both fundraising and deployment by the large as well as smaller credit managers in the sector. As Private Credit Grows, Loan Protections ErodeWhile the overall trajectory of the private credit market has been positive, there have been some unwelcome signs that there may be cracks emerging. The rapid pace of fundraising in a prolonged, benign, 'risk-on' environment has created mounting pressure to deploy capital. This has led to weakening terms and conditions of new private credit loans, as demonstrated by the increasing prevalence of covenant-lite loans in both broadly syndicated loans and private credit markets. Since 2011, the share of covenant-lite loans has risen dramatically. In the US private credit market, they accounted for around 15% of broadly syndicated loans in 2011, climbing to over 90% by 2023. Covenant-lite loans offer fewer financial restrictions and protective covenants for lenders than typical loan agreements, reducing safeguards in the event of borrower stress. In addition, over the past two years, covenant-lite issuance has become commonplace, especially in larger deals exceeding US$500 million. Furthermore, high-profile defaulted and fraudulent loans to companies such as First Brands and Tricolor have highlighted a lack of thorough due diligence and weakened credit underwriting standards that has led to multi-billion-dollar losses to private credit lenders. These cases provide additional evidence of the pressures to deploy capital and the intensifying competition within the market. While these trends are US specific, similar dynamics are emerging in Australia. Many larger private credit funds have grown comfortable with weaker terms, conditions, and documentation, drawing on their experience in international markets. This has intensified competition for larger leveraged buy-out loans, often with terms that benefit borrowers at the expense of traditional lender protections. Another feature which we have witnessed in the larger international funds is their more recent adoption of asset backed securities (ABS) or asset backed finance as a complement to their leveraged finance focus. This is principally due to ABS transactions having a much more prescriptive treatment of cashflows and stringent performance triggers that are embedded in comprehensive documentation as well as better margins for the risk. As such, there has been greater competition in the areas in which Revolution looks to deploy capital. Commitment to Credit Quality and Investor TransparencyIn today's environment of heightened competition and weaker loan terms, maintaining rigorous credit discipline is more critical than ever. Revolution has been able to maintain a high level of capital deployment and at the same time maintain high levels of credit quality principally due to the firms scale and target yield. Although operating on a smaller scale than the global private credit giants with Australian operations, Revolution has established a leading position in Australia and New Zealand by being able to provide in excess of A$200 million per transaction for loans that are priced with credit margins between 400 bps and 600 bps. In an environment where credit underwriting standards and documentation have weakened, Revolution remains focussed on thorough due diligence of each loan and maintains very strict quality standards. This discipline is evidenced by avoiding payment-in-kind (PIK) loans, cyclical exposures, lending to small or start-up counterparties, and entering into loans with very weak lender protections. In more recent portfolio transactions, Revolution has been able to take a cornerstone lender role through shaping key terms and conditions, as well as demand superior economics more akin to underwriting fees than syndication fees. In our last quarterly report, we discussed the findings of the two ASIC reports of the Australian private credit sector and outlined Revolution's response. The key findings of these reports �' covering areas such as treatment of upfront fees, independent portfolio valuations, avoidance of related-party transactions, and transparency on underlying loan portfolios - align closely with Revolution's existing practices. We are continually looking at ways to improve and remain committed to transparency and prompt responsiveness to ASIC's recommendations. Business Update: Strategic Partnership, New Products and Team GrowthDuring the quarter, it was announced that Revolution agreed to form a strategic partnership with ColCap Financial Group (ColCap) by selling a 14% stake in the firm to ColCap. ColCap is a leading non-bank originator of Australian mortgages with over a 20-year track record in originating and servicing these loans with an exemplary track record. The nature of the strategic partnership with ColCap will allow Revolution to bring two new products to market throughout the course of 2026. We look forward to presenting these products to our investors in due course. We are pleased to announce the addition of two new members to the Revolution team. John Price joined the firm at the end of 2025 in the newly created role of Head of Strategy and Distribution. John is a seasoned professional with over 20 years' experience in financial markets. He will be responsible for working with the Channel Capital distribution team in servicing existing clients, assist with capital raising, and contribute to the development and launch of new and innovative products in 2026 following the strategic partnership with ColCap. In addition, Christian Burrello joins as an Investment Analyst and will work closely with the investment team responsible for the senior secured corporate loans and real estate loans in the portfolio. We are proud to welcome the new members of the team in line with the firm's growth. Portfolio and pipeline reviewThe Revolution Private Debt Fund II (the Master Fund) has returned 0.67% (after fees)* in December and is meeting its target return of the RBA cash rate plus 4% to 5% p.a. (net of fees and expenses) since inception.** The objective of the Master Fund is to achieve this return with low volatility and with the benefit of having security over the underlying assets. The Master Fund has a total fund size of A$3.06 billion as at 31 December 2025. The Master Fund held a total of 57 loans as at 31 December 2025, with an average expected life of the portfolio being 1.9 years. The portfolio yield to maturity is 8.84%, with a credit spread of the portfolio above BBSW of 493 bps. The average credit rating of the portfolio is BB. The deal pipeline in Australia and New Zealand remains robust, which should allow for continued strong deployment. In Senior Secured Corporate Loans, activity has increased in the second half of the year as was expected earlier in the year. The Asset Backed Securities market remains active. Revolution has been focused on upsizing many of its existing private warehouse investments as the size of facilities and the Fund's appetite grows in tandem while investing in new warehouses from well capitalised preferred originators. Additionally, Revolution continues to find and capitalise on attractive secondary market opportunities across sectors. Source: Revolution Asset Management. See below for defined terms. Revolution Private Debt Fund II (CHN3796AU)*
* Performance is based on month end unit prices before tax. Net performance (after fees) is calculated after management fees and operating costs. Individual Investor level taxes are not taken into account when calculating returns. This is historical performance data. It should be noted the value of an investment can rise and fall and past performance is not indicative of future performance. The comparison to the RBA Cash Rate is displayed as a reference to the target return for the Master Fund and is not intended to compare an investment in the Master Fund to a cash holding. Loans held by the Master Fund are subject to borrower default risk and as such the Master Fund is of higher risk than an investment in cash. Portfolio characteristics as at 31 December 2025
Source: Revolution Asset Management. See below for defined terms. These 'forward-looking statements' are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed. Although we believe that the Fund's anticipated future results, performance or achievements expressed or implied by those forward-looking statements are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements. |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
Funds operated by this manager: Revolution Private Debt Fund II , Revolution Wholesale Private Debt Fund II - Class B This material has been prepared by Alphinity Investment Management ABN 12 140 833 709 AFSL 356 895 (Alphinity). It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Any projections are based on assumptions which we believe are reasonable but are subject to change and should not be relied upon. Past performance is not a reliable indicator of future performance. Neither any particular rate of return nor capital invested are guaranteed. |
