Morningstar withdraws recommendation on LM Mortgage Income Fund
Morningstar says the mortgage sector faces “strong headwinds” as it announces the withdrawal of its recommendation for the LM Mortgage Income Fund following closure of the fund.
LM Investment Management announced on March 3, 2009, the closure of this strategy to new applications while the firm embarks on a repayment program for its line of credit facility.
A statement from Morningstar said the fund’s exposure to “higher-yielding but riskier sectors” such as construction and pre-developed land and its concern with the credit facility, which grew to over 20 per cent of the loan book in 2008 led it to downgrade its recommendation to ‘hold’ in August 2008.
“This approach has never been one of our favoured mortgage fund strategies,” Morningstar said.
The withdrawal of the recommendation follows LM’s decision to extend the fund’s redemption time frame from 30 days to one year.
LM said while redemptions are delayed the fund is still paying income to investors.
Morningstar has coverage on seven other mortgage fund strategies and is currently reassessing its existing recommendations.
AUTHOR
Corrina Jack
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.
