How high is advisers' private credit usage amid ASIC concerns?

Despite ASIC concerns about private credit funds being accessed via the advised channel, VanEck research finds more than a third of advisers say they are yet to allocate to the asset class.

Earlier this week, ASIC released a thematic surveillance of private credit funds which examined fund disclosures, marketing, income transparency, governance and valuation. Eight private credit funds were available to wholesale clients as non-registered funds while 20 were retail registered funds, varying in size from $11 million to $12 billion in assets under management.

As part of this, it found few retail private credit funds required, as part of the distribution conditions in their target market determinations (TMDs) that investors receive financial advice prior to investing but advisers were still described as a key distribution channel for 16 retail funds.

Only two retail funds specified that clients should receive personal advice, while seven retail funds required unadvised retail investors to fill out a questionnaire prior to investing.

But VanEck’s survey of 500 advisers in September 2025 found there are still a substantial portion of advisers who have not invested in private credit. Some 40 per cent had not made a private credit allocation in their portfolios and 27 per cent had only done so on an opportunistic basis.

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Even for those who had added exposure, they typically had an allocation of less than 10 per cent.

Liquidity constraints were cited as the biggest barrier to investment with several private credit funds imposing limited redemption periods or the use of lock-up windows.  This was followed by concerns regarding high fees or lack of transparency, both topics mentioned in ASIC’s private credit surveillance this week. 

Arian Neiron, chief executive of VanEck, said: “In our most recent survey of Australian financial advisers, the broader sentiment about private markets reflected ASIC’s concerns. Despite the high-yield returns promised in this sector, less than a third of advisers actively allocate to private market investments, and most have limited their exposure to under 10 per cent of portfolios.”

Earlier this week, Money Management covered how the use of private markets can affect advisers’ tracking error between portfolios, leading them to be hesistant on its usage.

Speaking to Money Management, Hassan Suffyan, head of wealth management for EMEA and APAC at MSCI, said: “A lot of our clients struggle with the complexity of the asset class and adding private market exposure and finding it taking up a lot of tracking error budget.

“We are doing work with our clients to help bring private markets into their strategic asset allocation (SAA) so it is viewed as a long-term play and they can go further through the investment process.”

Meanwhile, financial adviser Roger Perrett of Freshwater Wealth in Sydney suggested the ‘tide is turning’ on private markets in the wake of interim stop orders placed by ASIC multiple private credit funds including two run by La Trobe Financial.  

“There’s just been so much positive news and positive updates about credit, like it’s the answer to everything. Now we’re starting to see some negative stories and negative press coming out about it. More and more advisers are thinking, ‘Hang on a minute, this isn’t the free lunch that people thought it was, they’re not just term deposits’,” Perrett said.

Industry reaction to ASIC's report 

Blake Briggs, chief executive of the Financial Services Council (FSC) said the organisation is undertaking development of its own standards for private credit. 

“The FSC has taken an industry leading position by undertaking development of standards for the private credit and private market sector in consultation with leading global and Australian private market operators and our superannuation membership. 

“The FSC standard will promote greater consistency, transparency and accountability for all participants in the private markets sector.

"Industry agrees with ASIC's assessment that there is a spectrum of practice, and that during this period of rapid growth in the sector robust minimum standards are necessary to maintain regulator and consumer confidence in the industry.”

Victor Rodriguez, chief executive of funds management at Challenger, said: “We welcome ASIC’s work to strengthen standards across private credit. The report shows a strong understanding of the sector and identified the key issues the market must address. 

“With a wide range of offerings and governance practices in play, these reforms are an important step toward lifting standards and consistency as the market grows. The case studies provide valuable insights for advisers and ratings agencies assessing exposure to private credit.”