28 October 2009

Dear Investor,

La Trobe’s Mortgage Fund - the Pooled Mortgages Option

Many of our readers are familiar with the four investment options that are available in the La Trobe Australian Mortgage Fund.

This Investment News focuses on the Pooled Mortgages Option.

The Pooled Mortgages Option, as the name suggests, pools investors’ money to invest in a wide range of first mortgages in Australia, diversified by both sector type and geographic location. The Option currently invests in nearly 300 different mortgages. The initial investment term is for 12 months, and the maximum loan to valuation ratio for mortgages in the Pooled Mortgages Option is 75% (the actual average is 60.0%). 

One of the key strengths of the Pooled Mortgages Option, as confirmed over the last 18 months, is the stability of its returns. The Option is often discussed in the same context as cash and term deposit investments, but the experience of the last 18 months shows that these types of investments are not as stable in terms of returns as once was expected. It is important to note that the Pooled Mortgages Option is not a term deposit.

The chart below demonstrates that mortgage investment returns have remained remarkably stable over the last 5 years, in a time of considerable volatility. Over the last 5 years, the Pooled Mortgages Option’s annual return has averaged 7.5% and remained stable between 7.0% and 8.0% p.a. If monthly distributions were re-invested, the range was 7.2% and 8.3% p.a. compound.

In this vein, the investment return for the Pooled Mortgages Option will increase from 1 November 2009 to 7.15% variable p.a, from 6.95% variable p.a.


Click image to enlarge

In addition, the Pooled Mortgages Option, with its high quality asset base, has been able to maintain both asset values and distributions. Over the last 18 months, fixed interest type assets, such as some bonds, have experienced dramatic loss of capital value, overturning the common perception about the risks associated with these assets. The value of our mortgage investments is not linked to the market and their capital value is not exposed to this instability. The assets of the Pooled Mortgages Option have performed consistently over the years and there is no reason to expect a deterioration in performance in the future. Furthermore, the security enhancement to the Pooled Mortgages Option, through its dedicated cash reserve, has again increased over the last year. Both the asset quality and the dedicated cash reserve affirm the Option’s strong capital security position.

Best regards,
Chris Andrews


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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.