13th August 2008
La Trobe's Investment Allocation for the Pooled Mortgages Option
As with most investments the key to success can lie in the appropriate diversification of your investments funds.
What Is Diversification?
When we talk about diversification in relation to investments, we are referring to the attempt by investors to reduce their exposure to risk by investing in various assets across different sectors, industries or even countries. Most investment professionals agree that although diversification is no guarantee against loss, it is a prudent strategy to adopt towards achieving your long-term financial objectives.
Successful investors know that diversifying their investments can help reduce the impact that a single, poorly performing investment can make on their overall portfolio, or mix of investments. This belief is often summed up in the adage "Don't put all your eggs in one basket".
The same principals that relate to investors also relate to
La Trobe's Pooled Mortgages Option.
Determining the Investment Mix
An important first step in building and maintaining our Pooled Mortgages Option is the establishment of a well-diversified portfolio of qualifying mortgages. This is where we decide on how to divide the funds invested in this option among the various mortgage investments available. This process is called asset allocation and is an investment strategy that aims to balance risk and return by apportioning the portfolio's assets according to the investment goals and risk tolerance.
The Pooled Mortgages Option is diversified at two distinct levels as part of its asset allocation. This is referred to as sector allocation and geographic allocation. The management of the Pooled Mortgages Option pays special attention not only to the optimal mix of cash and qualifying mortgage investment but also to the distribution of investment funds between security types, for example residential, vacant land, commercial, industrial and rural properties and geographic location, that is, in terms of Australian mortgages, the percentage of total funds invested in each state and territory.
The Pooled Mortgages Option aims to consistently hold investments in a wide range of mortgages in a range of industry sectors, with geographic diversification across Australia as established and reviewed by our Board of Directors.
The Pooled Mortgages Option holds the majority of its invested funds in mortgages secured predominately by residential property but also other traditional properties such as commercial offices, retail shops and industrial sites.
Maintaining a Diversified Portfolio
La Trobe's dedicated management team regularly reviews the investments in the Pooled Mortgages Option. The Fund often adjusts its weighting between sectors following changes in the economy or state related issues.
La Trobe understands that it's never easy to find the time to review your investments and this is why many investors have chosen to invest in the Pooled Mortgages Option.
About La Trobe
The diversified Pooled Mortgages Option of the Fund reflects La Trobe's professional approach to investment management and over 50 years' experience in mortgage lending.
The La Trobe Group is one of Australia's leading mortgage managers with total funds under management exceeding $1.6 billion.
La Trobe prides itself on its investment management performance and aims to provide consistently higher returns from an investment option that performs well across the economic cycle, with little volatility and controlled overall risk to the investment.
It's important, however, to remember that no matter how diversified a portfolio is, your investments can never be totally devoid of risk. You can reduce risk associated with investing but there are inherent market risks that affect nearly every investment. No amount of diversification can prevent a certain amount of risk inherent in investing.
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Head of Funds Management
t +61 3 8610 2811
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.
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