Aust Unity revives mortgage funds
Investors are being offered an opportunity to gain a steady income stream through Australian Unity's latest mortgage fund offering.
The Australian Unity Select Mortgage Income Fund, has moved away from the pooled fund style that was popular in the pre-global financial crisis (GFC) era, adopting the contributory mortgage model, that was developed in the 1950s.
Australian Unity head of mortgages, Roy Prasad, said the contributory fund did not have the liquidity issues that saw pooled funds fall by the wayside during the GFC.
"A pooled structure, with its liquidity issues was always going to be problematic," he said.
"The contributory structure really provides a solution… the structure of our contributory mortgage fund is we offer a maximum loan term of 24 months.
"So the duration is capped at 24 months, the style of lending that this fund is currently undertaking is construction development fund [and] our loan size is capped at about $8 million in order to deliver the return, and the return that we're currently delivering is the present interest rate environment is around seven per cent."
Prasad said the fund was proving attractive to retirees given the current cast rate.
"Retirees in a term deposit are getting anywhere between two and 2.5 per cent now," he said.
"If you're a retiree a two to 2.5 per cent return is not really going to cut it, they still have to manage their bills, food, registration and the rest of it."
Through the Select Mortgage Income Fund, investors are able to invest in specific projects that have borrowed from the fund, which Prasad said had been a feature that gave planners a reason to meet their clients to discuss opportunities.
"One of the issues planners have is getting in front of their clients," he said.
"A product like this allows the adviser to sit in front of the investor ad run through ‘they're doing this', so there's a real reason and it's value to the investor that they can meet (every) six or 12 months."
Recommended for you
There is growing divergence between institutional and retail investors in their enthusiasm towards equities, according to Bank of America, with retail sentiment being “unusually low” at the start of 2025.
Natixis Investment Managers is set to merge with a global fund manager to create a multi-affiliate business with a combined $3.1 trillion in assets under management.
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
