The Yield Illusion: Inside RAM’s Strategy to Withstand the Credit Shakeout

As the private credit market faces intense scrutiny following a massive repricing of global interest rates, the line between brilliant yield strategies and ticking financial time bombs has never been thinner.

While capital continues to flood into alternative assets, a growing chorus of market veterans warns that a wave of disappointment is looming for yield-hungry investors who fail to look under the hood.

“Some of the strategies in the market today are genuinely brilliant, and some are actually going to disappoint a lot of people in the next few years,” says Scott Kelly, Managing Director and Group CEO of Real Asset Management (RAM).

Speaking on the shifting dynamics of the credit landscape, Kelly shares that the domestic conversation is undergoing a pivotal shift. Investors are moving away from blindly chasing the highest headline yield and are instead focusing intensely on the underlying risk required to generate those returns.

For RAM—an independent alternative asset manager with over $8 billion assets under management across credit and real estate and a 250-strong team—the solution to navigating this macro volatility lies in a philosophy they wear proudly: specialising in “boring.”

The explosive growth of Australia’s $2.4 trillion mortgage market has birthed a crowded private credit ecosystem. However, Kelly points out a structural flaw in how many managers deploy capital. Most funds collect investor cash and chase existing credit deals in the open market—a dynamic that inherently compresses returns and drives up risk profiles as more money pursues fewer high-quality opportunities.

RAM’s primary differentiator is its vertically integrated model. The firm owns Brighten, a non-bank lender originating around $400 million in Australian mortgages every month.

This origination pipeline feeds directly into RAM’s flagship Real Income Fund, which targets a floating-rate return of 4% above the RBA cash rate. It currently delivers an 8.35% p.a. return, with monthly distribution.

Unlike funds exposed to volatile corporate debt or high-stakes property development loans, RAM’s credit strategies are underpinned by a $5.5 billion book of standard, secured Australian  mortgages.

To appreciate the defensive nature of this strategy, Kelly points to a singular, critical metric: the arrears performance.

While the Big Four banks typically report mortgage book arrears sitting around the 1% mark, RAM’s portfolio is tracking at an astonishingly low 0.11% (as at 28 Feb 26).

Asset Quality Comparison (Arrears Rate)

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Big Four Banks:       ~1.00%

RAM Portfolio (end of Feb 26):         0.11%

“We’re almost a tenth of that,” Kelly notes. “We are not taking excess credit risk to generate these returns. We’re actually much lower risk than most market participants.”

For wholesale and advised retail investors, assessing the complex plumbing of private credit can be daunting. Kelly suggests that investors look for institutional validation.

Brighten’s $5.5 billion mortgage book is predominantly funded by global and domestic banks—institutions that conduct exhaustive due diligence before committing capital.

Crucially, RAM couples this institutional backing with direct alignment. Because the firm is 100% staff-owned, executives and employees have significant skin in the game. In its fund structures, RAM absorbs the “first loss” tranche.

“We would lose money before any of our investors would lose money,” Kelly emphasises. “When we say our money is on the line, it really is on the line which means we have true skin in the game.”

Another hidden trap in private credit is illiquidity, with many funds locking up investor capital for years in illiquid project loans. By contrast, funds invested in more standardised, securitisable assets such as prime, regulated mortgages, can typically generate liquidity at any time by selling these loans to major banks through standby warehouse facilities or to institutional investors.

Kelly also addresses this via scale; because its credit fund is a smaller slice of a much larger $5 billion institutional funding platform, it benefits from unique liquidity dynamics, and gives RAM the ability to generate liquidity when needed. Currently, 71% of the assets within the Real Income Fund can be liquidated within five days, allowing for a seamless monthly redemption profile.

Beyond credit, RAM is applying a similarly defensive, mega-trend-driven lens to its real estate portfolio.

Steering clear of highly cyclical sectors, the firm is heavily focused on assets backed by robust demographic tailwinds and government support, specifically healthcare and grocery-anchored essential retail.

The firm also sees a counter-cyclical opportunity emerging in the mid-market office sector, particularly in Brisbane.

“You can buy well below replacement costs at the moment,” Kelly observes. “Which typically means, if history is a guide, you’ll probably make some decent money.”

As macro uncertainties persist, RAM’s blueprint suggests that the winners of this cycle won’t be the managers offering the flashiest structures or exotic yields. Instead, the crown will likely go to those who mastered the fundamentals of asset origination, deep liquidity, and uncompromised credit quality.