The boxes that investors should be ticking in this asset class

Here's a question for you - What do Coles and Woolworths, the Big Five banks, and Australia's favourite biscuit brand have in common? The answer is that they are all issuers in the diverse and fascinating world of credit.

Most of us are familiar with bonds - they are issued and backed by governments (municipal, state, and federal), they offer a risk-free benchmark by which all investments can be measured, and their return potential is more or less locked in. It's safe, boring, and likely the closest thing you can get to a risk-free investment after putting cash under your bed.

But credit is the far more fascinating cousin in the broader fixed income universe. Private and public companies all, at one time or another, will need to borrow money to fund growth plans or to finish existing projects. The largest companies with the largest balance sheets and best reputations are called "investment grade" assets. They are the most secure but the lowest-yielding, and naturally the more risk you take, the more yield you could earn but the higher your default or capital loss risk.

In this video, bond market veteran and Perpetual Director of Credit and Fixed Income Michael Korber educates us all on the value of credit to investor portfolios, how he determines what "fair value" is, and shares his process for spotting great investments. And yes, for the Tim Tam and Milk Arrowroot fans out there, we do promise that there is an Arnott's reference if you stick around to the end of the video.