Author: Vikas Arkalgud

Msquared Capital is delighted to confirm that Evergreen Consultants has reviewed both the Msquared Mortgage Income Fund and Msquared High Yield Mortgage Income Fund and rated them both as Investment Grade.  Watch the video to see Paul Miron, Msquared Capital Managing Director, discuss the funds with Evergreen Ratings’ Founder Angela Ashton. Please contact as at info@msqcapital.com.au if you would like a copy of the research report.

The information shared in this video is general in nature and does not consider your objectives, financial situation or needs. Before acting on the information shared, you should seek advice tailored to your needs.

This video exists for educational purposes and should not be relied upon to make an investment or financial decision.

As 2023 draws to a close, we are presented with an opportune moment to reflect on a year marked by economic resilience and a transformation of our economic environment that has not been seen for decades. We continue to push through the complex circumstances presented by the post-COVID recovery, remaining inflation, and the aggressive array of official interest rate increases during 2023.

The most recent inflation figures, both here and in the US, reinforce that inflation is here to stay, with US inflation having risen to 3.7% in August 2023 (up from 3.2% in July 2023), and Australian inflation remaining elevated at a rate of 5.2% in June 2023. At the same time, expectations of higher oil prices have been adding to inflationary pressures and dashed hopes that interest rates will be cut in early 2024. A structurally elevated cash rate is seen as a reality and has opened the door to further interest rate hikes.

As the outgoing Reserve Bank Governor, Philip Lowe, faced the House of Representatives Standing Committee on Economics last Friday, a sigh of relief was shared amongst mortgage holders that “the worst is over” regarding the fight against inflation. It only took 12 interest rate hikes to bring inflation at bay in the quickest contraction in monetary policy in Australia’s modern history. As many Australian mortgage holders are now tipping over the wretched mortgage cliff, we see signs within leading economic indicators such as retail sales, consumer business confidence and mortgage arrears, that there is much more pain to come.

At the beginning of 2022, I posed the following question to an audience of sophisticated self-directed investors:

Is Private Credit the new megatrend in Australia?

It is important to remember these were carefree times when the official cash rate was at a historic low of 0.10%, and terms such as ‘cost of living pressure’, ‘mortgage stress’, ‘inflation’ and ‘recession’ were not part of our vernacular.

I learnt a few lessons that day: