As at 13 October 2026.
If you hold a private credit or mortgage income fund, you probably bought it for a sensible reason: it paid 7% to 10% when term deposits paid less, the income arrived every month, and the unit price barely moved. If you have been offered one lately, that is still the pitch.
This year the regulator has started asking harder questions on your behalf. Since September 2025 ASIC has issued a series of interim stop orders against private credit and mortgage funds. The most recent, on 13 October, stopped new retail investment in Class A units of the Ares Global Credit Income Fund, an $800 million fund issued by Fidante, because ASIC was concerned about the fund’s target market determination. None of these orders is a finding that loans have gone bad. They are about whether products were being offered to people they were not designed for, and whether the risk ratings, “capital preservation” language and withdrawal terms matched what was inside. Several have since been lifted after the manager amended its documents; the Remara orders, for example, were revoked on 1 October.
That is a good moment to look at what you hold. Not to sell it, but to understand it. The regulator’s concerns map closely to five questions you can ask yourself.
What is happening inside the asset class
The picture beneath the headlines is mixed rather than bad. It also depends on which part of the market you are looking at.
In international corporate direct lending, headline fundamentals have been stable: non-accruals are below their long-run average, realised losses have been modest, lending volumes recovered in the September quarter, and new loans are being written on wider spreads and tighter terms. Beneath that, dispersion is widening. Stress is concentrated in loans written in 2021 and 2022, when money was cheap and terms were loose, and in software businesses where lenders are reassessing the risk that AI disrupts the borrower.
Australian property-focused private credit is a different segment. The research houses we draw on are more cautious on it after recent fund failures and the regulatory attention described above. Nothing in the international data should be read as a clean bill of health for a fund lending against Australian property.
The common thread across both is that manager quality, lending discipline and honest communication now matter more than headline yield. Two funds paying the same 8% can be lending against very different things, on very different terms, to borrowers in very different shape.
Five questions to ask about the fund you hold
You do not need to read the loan book. You need answers to five questions, and a manager who gives them without hedging.
1. What is the money lent against, and to whom? Corporate loans, property development, consumer finance, equipment, residential mortgages: each has its own cycle, its own security and its own recovery rate when things go wrong. Senior-secured lenders generally rank ahead of junior and unsecured creditors, but what is recovered depends on the security, the legal structure and the value available when it is sold. Ask where the fund sits and what it holds as security.
2. How is it valued, how often, and by whom? A stable unit price does not mean the underlying loans are risk-free. Private loans are not traded, so their values rest on models and judgement. Ask how loans are valued, when impairments are recognised and who independently reviews those decisions.
3. What are the withdrawal terms in a bad month? Not the normal terms: the terms when redemptions exceed what the fund can meet. Most private credit funds have gates, notice periods or the right to suspend withdrawals. That is appropriate for the asset, but you should know it before you need it, and your allocation should assume you cannot get the money quickly. Several of ASIC’s orders turned on how clearly this was disclosed.
4. What does the arrears and non-accrual data say? Every manager has this. Ask for the percentage of loans in arrears, the percentage not accruing interest, realised losses over the past three years, and how those compare with the fund’s own history. Rising arrears alongside a steady unit price is a question, not an answer.
5. Why does it pay what it pays, and where does the cash come from? Yield is compensation for something: credit risk, illiquidity, leverage, complexity or concentration. If the fund pays two points more than comparable funds, one of those is doing the work. Then ask the harder question: are distributions covered by cash interest actually received, after fees, or do they include capital or accrued interest that has not yet been paid?
What we do with our own holdings
Our model portfolios hold private credit for its income and its diversification from listed markets, and we review those managers each quarter rather than each time a headline lands. Our monitoring covers arrears, non-accruals, valuation discipline, borrower cyclicality, sector concentration, liquidity terms and the ratings and commentary of independent research houses. Our September-quarter review recommended no change to managers. That is a description of our process, not a comment on any fund you may hold elsewhere.
The bottom line
Regulatory attention on private credit is not a reason to panic and not a reason to ignore. The stop orders are about matching products to people, disclosure and valuation, and the cycle beneath them is one of widening dispersion between managers rather than broad losses. Private credit can pay a useful income; the illiquidity and credit risk that pay for it are real too. Ask the five questions, read the answers calmly, and check the fund still fits the job you gave it.
One measured step: find the latest investor update for each income fund you hold and look for the arrears figure, the withdrawal terms and how distributions are funded. If you cannot find them, that is the first thing to ask about.
Speak with an adviser
If this affects you, it may be worth reviewing your position before making changes. We can help you work through the questions above for the funds you hold and whether the allocation still suits your circumstances.
This article is general information only, current as at 13 October 2026. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information, consider whether it is appropriate for you and seek advice tailored to your circumstances. References to ASIC action are drawn from ASIC’s published media releases as at the date above; an interim stop order concerns a product’s target market determination or disclosure and is not a finding about a fund’s loans or manager, and orders may be varied, revoked or allowed to lapse. Private credit funds are not bank deposits; capital and income are not guaranteed and withdrawals may be restricted. FinPeak Advisers does not provide credit advice. FinPeak Advisers ABN 20 412 206 738 is a Corporate Authorised Representative No. 1249766 of Spark Advisors Australia Pty Ltd ABN 34 122 486 935 AFSL No. 380552 (a subsidiary of Spark Financial Group ABN 15 621 553 786).
Sources: ASIC, 26-241MR, ASIC issues DDO stop order against Fidante Partners Limited for TMD deficiencies, 13 October 2026 (Ares Global Credit Income Fund, Class A units, $799.9m AUM at 30 June 2026; 21-day interim order); ASIC, 26-225MR (Remara Cash Management Fund products, 22 September 2026; orders revoked 1 October 2026 after TMD amendments); ASIC, 26-234MR (Australian Secure Capital Fund schemes); ASIC statements on La Trobe Financial (18 September 2025), RELI Capital and TruePillars (2025); Moneysmart, What is private credit; FinPeak, Quarterly Asset Allocation Outlook, October 2026 (private credit section, drawing on Macquarie Wealth Management and BlackRock Investment Institute).
ASIC has issued a run of interim stop orders on private credit and mortgage funds. Five questions to ask about what you hold, and what the answers tell you.
