Fund managers have sorted out mortgage funds for retail market
The liquidity issues that caused a number of mortgage funds to be frozen at the height of the global financial crisis have been addressed and these funds can now offer retail investors a relatively stable income investment option, according to Trilogy Funds Management director John Barry.
He said fund managers had learned from the experiences of the financial crisis and have since imposed shorter loan terms, limited exposure to individual borrowers, lower loan-to-value ratio limits and longer withdrawal notification periods.
"The creases have been ironed out by those fund managers and what's left is an investment that offers relatively stable returns, a decent rate and capital preservation," Barry said.
"While it's understandable that retail investors remain cautious about the sector, it's important they're aware of the role that mortgage trusts can play in boosting portfolio income, particularly as term deposit yields look less and less attractive."
Recently, Trilogy re-launched its mortgage trust, extending the notice period required for redemptions from the trust from one month to four months.
"The loans written by traditional mortgage trusts were simply too big and too long-term to cope with what was once perceived as an 'at call' redemption offering," Barry said.
"Investors and advisers need to appreciate this fact."
Barry's comments come after Money Management yesterday reported that investment manager Perpetual decided to withdraw its retail mortgage fund offering (Perpetual Private Capital Income Fund) in April only a month or so after being launched.
Recommended for you
Insignia Financial has reported net inflows of $448 million into its asset management division in the latest quarter, as well as popularity from advisers for its MLC managed accounts.
With ASIC questioning the dominance of research houses when it comes to retail usage of private market funds, a research house has shared how its ranking process sits alongside ASIC’s priorities.
Two Australian active fund managers have been singled out by Morningstar for their ability to achieve consistent performance and share price growth in the past 12 months.
Pinnacle Investment Management has expanded its private market coverage, forging a strategic partnership with a private markets manager via a 13 per cent stake acquisition.
