Towers Watson is expanding its team in order to increase its capacity to explore alternative growth investments, rather than high allocations to equities, for its clients.
“One of the hallmarks of the organization, has been looking to help our clients diversify away from the excessive reliance on the equity risk premium,” Graeme Miller, director of investment services, for Towers Watson in Australia, said.
That, and assisting clients to find high-yielding investments in a low-yielding environment without dialling up their risk budgets too much, are the two main things, Miller says the investment team is focusing on currently.
One of the asset classes drawing attention from the consultant is private credit. This does not refer to private or corporate bonds, but extending finance to organizations that have been unable to obtain it through traditional sources, or purchasing existing debt at attractive rates.
“Private credit is another area our clients have invested in,” Miller said.
Globally around one in three Towers Watson clients have invested in private credit with approximately one in three to four investing in it in Australia.
“They can get a more attractive return by lending money to a company than they would have by otherwise purchasing equity [in that company],” Miller said.
Private credit as an asset class has grown in the wake of the GFC as traditional lenders have tightened up their lending criteria and wholesale finance has become more expensive to obtain.
“Many banks are looking to reduce their corporate lending on their balance sheets,” Miller says.
This then opens up opportunities for those providing alternative sources of finance and investors.
Investment consultants Sean Brereton from Access Capital Advisers and Dania Zinurova from Towers Watson in the UK have just joined the investment team.
Three new investment analysts – Jonathan Grigg, Richard Cooney and Majan Tharmanathan – have also been hired for the Sydney and Melbourne offices.
“What it does reflect is that the business is definitely growing,” Miller said.