For many Australians, running a self-managed super fund (SMSF) means taking greater operational control over how retirement capital is allocated across different asset categories.
As market conditions evolve, SMSF trustees are increasingly exploring alternatives to traditional options like cash products and listed market exposure. One category attracting attention is Fixed Term Investment Accounts underpinned by global private credit which are designed to provide target investment returns, structured income characteristics, and exposure to global private lending markets.
This article explains how these income-focussed fixed term products are commonly positioned within broader SMSF portfolio construction frameworks, and outlines operational considerations trustees may evaluate when assessing fixed term investment structures.
Understanding SMSF Investment Frameworks
An SMSF investment strategy is a documented framework that outlines how a fund approaches asset allocation, liquidity management, diversification, and risk considerations.
Under Australian superannuation regulations, SMSFs are required to maintain (and regularly review) an investment strategy that reflects the objectives and circumstances of the fund and its members.
In practice, this framework typically covers:
- Target asset allocation ranges
- Liquidity considerations
- Diversification across asset classes
- Income and capital objectives
- Risk tolerance considerations
- Review and governance processes
What Are Fixed Term Investment Accounts?
Fixed Term Investment Accounts are structured investment products that provide exposure to a target monthly income rate or return structure over a specified term, commonly ranging from several months to multiple years.
Some products in this category are backed by portfolios of global private credit assets rather than traditional bonds or domestic Australian private credit loans.
Private credit broadly refers to lending activity occurring outside traditional retail banking channels and may include:
- Corporate lending
- Real estate debt
- Infrastructure financing
- Specialty finance
- Mid-market business lending
The underlying credit assets are generally managed by specialist credit managers, with investment returns linked to the performance and income characteristics of those portfolios.
Why Global Private Credit Has Gained Attention
The global private credit market has expanded significantly over the last decade as regulatory changes and capital requirements altered traditional bank lending activity around the world.
As a result, institutional and alternative credit managers have become more active participants in areas of the lending market historically serviced by banks, with global private credit emerging as one of the fastest growing asset classes over the last 15 years as a result of it’s appealing characteristics, and the interest of global institutional investors.
Characteristics commonly associated with global private credit-backed products include:
Floating Rate Exposure
Many private credit facilities utilise floating interest rate structures, meaning returns may move alongside benchmark interest rate changes.
Senior Secured Lending Structures
Certain private credit portfolios focus on senior secured lending arrangements, where loans may be backed by business assets, cash flows, or other collateral structures.
Lower Correlation to Listed Markets
Global private credit returns are generally linked to contractual lending arrangements rather than daily equity market pricing movements.
Yield Differentiation
Because private credit involves additional complexity, structuring, and reduced liquidity relative to some traditional investments, products in the sector may offer different yield profiles and illiquidity premiums.
Example Portfolio Construction Approaches
SMSF trustees may categorise Fixed Term Investment Accounts differently depending on how their investment framework is structured.
Examples include:
- Fixed income allocation
- Alternative income allocation
- Diversification allocation
- Capital stability allocation
Illustrative allocation frameworks may include combinations of:
- Australian equities
- International equities
- Fixed income
- Cash
- Alternative income exposures
- Private credit-backed products
These frameworks may vary significantly depending on fund objectives, member age profiles, liquidity needs, and investment time horizons.
Liquidity and Operational Considerations
Fixed term investment products typically involve committing capital for a specified duration, generally in order to achieve an illiquidity premium on returns. As a result, trustees commonly assess:
- Expected cash flow requirements
- Timing of pension payments
- Return requirements
- Tax obligations
- Liquidity reserves
- Investment maturity schedules
Some SMSFs utilise staggered maturity structures (“laddering”) across multiple fixed term accounts to create periodic liquidity events over time.
Pension-Phase Income Characteristics
For pension-phase SMSFs, some trustees evaluate fixed-term products based on the predictability of scheduled income distributions or maturity profiles.
Depending on the product structure, return payments may occur:
- Periodically during the term
- At maturity
- Via floating or fixed-rate
Distribution structures vary by provider and product terms.
We can have a separate content article diving deep into floating Vs fixed and how they are related to target rates.
Governance and Due Diligence Considerations
When evaluating fixed term investment products delivered via private credit, trustees commonly review:
Underlying Portfolio Transparency
- Portfolio diversification
- Geographic exposure
- Sector concentration
- Borrower composition
Credit and Risk Management
- Security structure
- Loan seniority
- Historical performance data
- Portfolio monitoring processes
Manager Experience
- Track record across market cycles
- Credit underwriting capabilities
- Operational infrastructure
- Governance frameworks
Product Structure
- Investment term
- Redemption conditions
- Distribution frequency
- Distribution profile
- Rollover mechanics
- Protection mechanisms and other product features
- SMSF eligibility requirements
Their role within a portfolio depends on a wide range of factors including liquidity preferences, diversification objectives, investment horizon, and operational requirements of the SMSF.
This article is intended to provide general product and market information only. It does not constitute financial, legal, or tax advice and should not be relied upon as a recommendation or statement of suitability for any individual or SMSF.
To learn more about TermPlus Fixed Term Investment Accounts, visit TermPlus.
The issuer of units (Term Accounts) in TermPlus (ARSN 668 902 323) is Pengana Capital Limited (Pengana) (ABN 30 103 800 568, AFSL 226 566). Any advice provided is general in nature and does not take into account your particular objectives, financial situation or needs. Before investing in TermPlus, consider the PDS, TMD and further details on our website at https://www.termplus.com.au/important-information.
Protected: Global Private Credit Market Commentary
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