Growing evidence of a recovery in GDP growth, including household spending, has seen the futures market pare back pricing for future interest rate cuts. In effect, one 25 basis point interest rate cut has been ‘taken out’ of market pricing in the past month to the point where just two further cuts are priced between now and the middle of 2026.
STOCKHEAD & THE AUSTRALIAN
The term ‘commercial’ has been synonymous with property for decades. It conjures images of office towers, industrial blocks, and retail precincts. However, in the context of commercial real estate debt (CRED) – part of the broader real estate private credit market – commercial doesn’t describe the building, but rather, the underlying loan transaction. It’s about lending to a commercial borrower, typically a developer, and assessing the quality of the sponsor, the project, risk exposure, and execution. Tom Cranfield, Executive Director of Risk & Execution at Zagga, explains why this distinction matters for investors.
SMSF ADVISER
Tax has historically been levied on realised gains – profits made, not valuations. Division 296 breaks that tradition, creating a scenario where investors may owe tax on unrealised gains – values that could just as easily reverse.
This adds complexity for investors: it’s no longer just about selecting asset classes, but about structuring portfolios to manage tax exposure.
Persistent volatility and increased correlation across asset classes have led investors to look beyond conventional tools in search of better defensive strategies to protect income and build long-term resilience. This has accelerated interest in alternative asset classes—particularly real estate private credit.
Unlike traditional bonds, which tend to lose value when rates rise, floating-rate real estate credit adapts with the market, making it a powerful tool in modern defensive strategies to protect income.
Our strategy remains firmly focused on disciplined, conservative growth. Safeguarding our investors’ capital is our highest priority. For FY26, our objective is to continue increasing FUM by sourcing high-quality opportunities from accredited borrowers and trusted introducers. We remain committed to innovating and diversifying how these investments are structured and delivered to best serve all stakeholders
In this update, we share an overview of the current market environment and highlight how we are adapting to changing conditions while remaining focused conservative and prudent risk management.
“Zagga remains well-positioned to deliver superior performance, backed by deep expertise, a strong strategy, and proven risk management.” – Steven Levy, Executive Director
The Australian Wealth Management Awards is an unparalleled awards program that identifies the top businesses and professionals in the wealth management profession across the nation.
“We’re honoured to be recognised alongside some of the industry’s best. This achievement reflects the hard work of our team, the trust of our investors, and our shared belief in the role private credit can play in building more resilient, income-generating portfolios.”
STOCKHEAD & THE AUSTRALIAN
While the government argues Division 296 will only affect a small portion of Australians, it’s clear that SMSFs – often used by high net worth individuals to manage their retirement wealth – will feel the brunt.
If the tax does go ahead, it could lead to some big shifts in how super is used, and investors are likely to look for other places to park their wealth, such as trusts or companies.
That’s where private credit, like Zagga’s core offering, could come in for these investors.
STOCKHEAD & THE AUSTRALIAN
Traditionally, defensive investing meant a tilt toward fixed income – bonds and cash. For more cautious allocators, it also included real assets like gold. These assets were expected to provide protection when equities fell. But that assumption has been increasingly challenged in an environment where market correlations behave differently than they once did.
One asset class rising to meet this moment is private credit. At Zagga, we see firsthand how this market is maturing, how demand is growing, and how investors are shifting their thinking.
The moderate pick up in house prices in recent months is linked to a stalling in the growth of new supply, with new listings for sale falling and immigration inflows above official forecasts in the March quarter 2025. The resilient strength in the labour market has, for now, helped to support the housing market which has been further assisted by the early effects of lower interest rates.
We would like to acknowledge the Traditional Custodians of the lands, seas, and communities in which we provide our services. We would also like to pay our respects to the Elders past, present and emerging, and the continuing cultural influence they have on Australia.
Zagga Market Pty Limited (Australian Credit Licence 490904) ACN 611 662 401 acts as the Servicer of loans acting on behalf of the credit provider, Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786, trustee of the Zagga Investments Lending Trust
All portfolio numbers quoted correct as at 1 July 2025.
*Average investor return across the active portfolio as at 1 July 2025.
**Target return is after expenses and any applicable management fees for the year ended 30 June 2025. OCR = Australian Reserve Bank Official Cash Rate.
Past performance is not a reliable indicator of future performance and investments are subject to investment risk, fees and costs. Returns are not guaranteed.
Prospective investors wishing to invest in a Zagga direct investment or a Zagga Fund should fully consider the Information Memorandum, ZFF Fact Sheet and/or ZWF Brochure, available from Zagga, before applying to invest. Investments are subject to risks.
Articles on this website have been prepared by Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786 (Zagga) for information purposes only. It doesn’t take into account your objectives, financial situation or needs, nor is it intended as a substitute for any accounting, tax or other professional advice, consultation or service. Nothing in this article shall be construed as a solicitation to buy or sell any financial product, or to engage in or refrain from engaging in any transaction.
Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Economic conditions may change.
Any analysis provided in this article is based on information obtained from sources believed to be reliable but Zagga does not make any representation or warranty that it is accurate, complete or up to date. Zagga accepts no obligation to correct or update the information or opinions in it. Any opinions expressed in this article are of the author and is subject to change without notice. Readers are reminded to exercise caution and use their own judgment when interpreting and applying the information contained in this article No member of Zagga accepts any liability whatsoever for any direct, indirect, consequential or other loss arising from any use of such information.
