The Manning Monthly Income Fund delivered +0.67% in August 2026, bringing net returns to 8.29% over 12 months, 9.08% per annum over three years, 8.54% per annum over five years and 7.36% per annum since inception in April 2016.
The Fund targets the RBA cash rate plus 5% per annum over rolling five years. Over five years the Fund exceeded the cash rate by 5.31% per annum, and by 4.34% over the past 12 months. Returns are inclusive of distributions, net of fees and exclude tax. Past performance is not a reliable indicator of future performance.
Private Credit: One Label, Different Sources of Repayment and Risk
Recent headlines have again treated private credit as though it were one market. It is not.
The term has become so broad that published estimates of the Australian private credit market range from approximately $40 billion to $200 billion, depending on what is included. The RBA’s narrower estimate focuses primarily on managed fund lending to businesses, while ASIC’s broader estimate includes corporate lending, real estate and asset-backed finance.
Both figures can be correct. They are simply measuring different things.
This is more than a question of definition. The words “private credit” describe how lending is originated and held. They tell investors very little about the borrower, the source of repayment, the underlying security or what needs to occur for investors to be repaid.
The recent failure of a large Australian property developer, involving numerous private lenders, has understandably increased investor concern. The issues arising from that failure are serious and may have broader consequences within property development finance. However, they should be assessed in the context of that segment, rather than treated as evidence that every privately originated loan carries the same risk.
What Actually Sits Inside Private Credit?
ASIC broadly divides the Australian private credit market into three segments: corporate and commercial lending, real estate lending and asset-backed finance. Distressed and equity-like investments can also sit within each of these categories.
While these strategies are frequently grouped together, their sources of repayment and potential loss pathways are fundamentally different.
Corporate and Commercial Lending
Corporate private credit generally involves lending directly to an operating business. This can include senior secured loans, unitranche facilities, sponsor-backed lending, subordinated or mezzanine debt, venture debt and distressed lending.
The primary source of repayment is usually the operating cashflow and enterprise value of the business. Security may be taken over company assets, but those assets do not necessarily generate the income required to service the loan. They principally support recovery if the business cannot repay.
The relevant risks therefore include the financial performance of the business, its leverage, sector exposure, customer concentration, management capability and ability to refinance.
Real Estate Lending
Real estate credit is itself a broad category. It can include lending against established residential or commercial property, bridging finance, residual stock, land acquisition, construction and property development.
The distinction between these activities is critical.
A loan against an existing, income-producing property may be repaid from rental income, the sale of an established asset or refinancing based on its current value. Construction and development finance requires a series of future events to occur. A project may need to be completed on time and within budget, presales must settle, market values must hold and refinancing or sales liquidity must remain available.
These risks can also become correlated. Higher construction costs, project delays, weaker buyer demand, lower valuations and tighter refinancing conditions can occur at the same time.
A registered first mortgage remains an important protection, but it does not by itself determine the quality of the exposure. Investors also need to understand the valuation basis, the amount of genuine equity beneath the lender, whether interest is being paid in cash or capitalised, and how much of the expected value depends on a project that has not yet been completed.
Asset-backed Finance
Asset-backed finance includes structured lending against pools of residential mortgages, auto and equipment loans, consumer receivables, business loans and other financial assets.
Rather than depending on the performance of a single corporate borrower or the completion of a development project, repayment is generated by contractual payments from a diversified pool of underlying borrowers.
In a properly structured warehouse facility, the assets are held within a dedicated, bankruptcy-remote vehicle and cash is distributed through an agreed payment waterfall. Eligibility and concentration criteria control what can enter the pool, while arrears, loss and net interest margin triggers can redirect cash and accelerate repayment if performance weakens. The originating lender will also generally contribute first-loss capital beneath the funding provider.
Underwriting quality, servicing, asset performance and the level of structural protection remain critical. However, the way risk arises and is absorbed is different from a loan whose repayment depends on a single business, property or development outcome.
Considering Risk in the Context of the Underlying Assets
Identifying the segment is only the starting point. Risk also depends on how the exposure is structured within that segment.
A manager may invest at the senior or subordinated level, use fund-level leverage, hold a concentrated or diversified portfolio, receive cash interest or capitalised interest, and offer investor liquidity that may or may not match the underlying assets.
Consequently, two funds offering a similar headline return may be taking very different risks to generate it. One return may be supported by contractual cashflows from a diversified asset pool and a substantial layer of first-loss protection. Another may depend on a small number of leveraged borrowers, future property sales, refinancing or an increase in asset values.
Before drawing conclusions from a headline, investors should understand who the ultimate borrowers are, where repayment is expected to come from, whether that repayment already exists as contractual cashflow or depends on a future event, how concentrated the exposure is and where losses will be absorbed if performance deteriorates.
Without that information, the return alone says very little.
Where the Fund Sits
The Manning Monthly Income Fund operates within asset-backed finance. Manning provides structured funding to approximately 25 specialist non-bank lenders across residential mortgage, business and consumer lending.
The Fund’s exposure is to diversified pools containing more than 75,000 individual financial assets. These assets sit within defined financing structures supported by features such as lender first-loss capital, eligibility and concentration criteria, performance triggers, reporting requirements and cashflow controls.
The Fund has no exposure to construction finance. Nor is its repayment dependent on the operating performance of a single leveraged corporate borrower.
Our role is also distinct from that of the underlying non-bank lenders. Those lenders originate and service loans to individual borrowers. Manning provides wholesale funding against eligible pools of those loans and controls how capital and cashflow move through each facility.
The Fund remains focused on delivering a high level of monthly income while targeting capital preservation through diversified asset-backed exposures, disciplined structuring and active portfolio management.
