26th September 2007

Dear Investor,

What is a mortgage fund?

As the name suggests, mortgage funds take investors’ money and use it to make mortgage loans. Investors then receive the interest payments on those mortgages, after the investment manager deducts its fees and expenses. These mortgages can be for retail, commercial, industrial or residential properties.

Why have a mortgage fund in your portfolio?

Firstly mortgage funds can provide investors with superior investment returns to cash management trusts, and an extra level of diversification. Given that mortgage funds are not closely correlated with returns from other asset classes, adding a mortgage fund to your portfolio could smooth the volatility of your total investment returns.

Where does a mortgage fund fit into your investment portfolio?

Lending money in return for interest is a form of investing nearly everyone is familiar with. You do it every time you put money into a deposit account with your bank, building society or credit union.

However, the financial world has a host of products you can invest your money in, with the same common fundamental features. They promise to:

  • pay you interest, and
  • pay back what you lend them within a set period of time.
Generally you'll earn a higher rate of interest if you lend your money for a longer period of time, or if there is more risk involved in the borrower being able to repay your loan.  

Direct or indirect lending?

There are 2 main ways you can invest your money for interest:

  • Direct lending (fixed interest products) – which include putting your money into interest earning deposit accounts with banks, building societies and credit unions and investing in bank bills, Government and corporate bonds.
  • Indirect lending – through managed funds such as cash management trusts, bond trusts, mortgage funds and other managed funds that may invest in a wide range of loans. Investing indirectly through managed funds helps spread risk across a larger number of borrowers.
There are some basic issues that you should consider before choosing an interest bearing investment product.

Where does a mortgage fund investment fit?

Here are some of the most common reasons why people prefer to invest in lower risk interest bearing products:

  • Reduce risk in your investment portfolio. Companies in which you own shares may cut or suspend dividends, or you may have trouble letting your investment property, so if you depend on your investments for all your income (retirees for example), it might be reassuring to know that you will still get income from your investment in managed funds or interest on bank accounts or government bonds. Superannuation funds and investment managers may use mortgages and bonds to reduce their risk of losing money from falling share or property markets.
  • Park your money for a short time. If you have just sold your house and are still looking for another one, you might invest in a term deposit or a cash management account to park the money till you need it.
  • Hold money that you cannot afford to lose. For example, money to cover emergencies, or needs you expect to crop up within a couple of years whether it's school fees, an expensive trip or retirement living expenses.
  • Save the money for a large expenditure you’re planning in 2-3 years time. For example, a trip overseas, deposit on a car or house.

In general, investing for income in this way can offer you a safe way to preserve wealth while earning income.

La Trobe's Mortgage Fund

La Trobe's Mortgage Fund offers you four options to tailor your investments to meet your income needs while satisfying your own appetite for risk.

Best regards,
Chris Andrews


> Home
> About Us
> PDS - Want to invest?
> FAQs
> Subscribe Free
> Independent Ratings
> Mortgage Shopping List

Chris Andrews
Head of Funds Management

t  +61 3 8610 2811
e  candrews@latrobefinancial.com.au

Chris Andrews is the Head of Funds Management for the La Trobe Group and has responsibility for the La Trobe Australian Mortgage Fund.
Read full profile here.

La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 115 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.

Copyright 2010 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial. Disclaimer

* La Trobe Financial Asset Management Limited ABN: 27 007 332 363 and AFSL No: 222213 is the issuer and manager of the La Trobe Australian Mortgage Fund. It is important for you to read the Product Disclosure Statement for the Fund before you make any investment decision. You can get a copy of the PDS by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you.
(1) The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund, and may achieve lower than expected returns. Past performance is no guarantee of future performance. Investors risk losing some or all of their principal investment.
(2) Withdrawal rights are subject to liquidity and may be delayed or suspended.
(3) As at 30/11/10 the La Trobe Australian Mortgage Fund had received a Morningstar RatingTM of 5 stars. The Morningstar Rating is an assessment of a fund's past performance - based on both return and risk - which shows how similar investments compare with their competitors. A high rating alone is insufficient basis for an investment decision. © 2010 Morningstar, Inc. All rights reserved. Neither Morningstar, nor its affiliates nor their content providers guarantee the above data or content to be accurate, complete or timely nor will they have any liability for its use or distribution. Any general advice has been prepared by Morningstar Australasia Pty Ltd ABN: 95 090 665 544, AFSL: 240892 (a subsidiary of Morningstar, Inc.), without reference to your objectives, financial situation or needs. You should consider the advice in light of these matters and, if applicable, the relevant product disclosure statement, before making any decision. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/fsg.pdf
(4) 3.75 star rating out of a possible 5 star rating indicates that Adviser Edge believes that La Trobe has performed in line with its peers and exceeded its peers on some fronts.
(5) The Standard and Poors rating of 4 out of 5 stars indicates that S + P has high conviction that La Trobe Financial will consistently generate risk-adjusted fund returns in excess of its relevant investment objectives and relative to its peers.
(6) The award was given to the La Trobe Australian Mortgage Fund, Pooled Mortgages Option.
Research Ratings are subject to change. To view the latest research information please visit www.adviseredge.com.au or www.standardandpoors.com.au. Ratings issued by Adviser Edge Investment Research AFS Licence No. 236783 and Standard & Poors Information Services (Australia) Pty Ltd AFS Licence No. 258896 are solely statements of opinion and not statements of fact or recommendations to purchase, hold, or sell any securities or make any other investment decisions. The ratings are only one factor to be taken into account in deciding to invest. Research Houses receive a fee from La Trobe for rating the product. The Adviser Edge rating is generally a measure of the rated entity's capacity to meet its repayment obligations in all market circumstances.
IMPORTANT: This message, together with the La Trobe Financial website (www.latrobefinancial.com.au) and all its contents have been prepared for general information only and should not be taken as legal or financial advice, and as such the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before acting on any information present on this message or the La Trobe website.