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24 June 2010

Dear Fellow Investor,

The Pooled Mortgages Option equal highest rated mortgage fund in Australia!

La Trobe is pleased to announce that Standard & Poor's has released its annual ratings paper in relation to the Pooled Mortgages Option, as well as the annual sector review. These papers have confirmed La Trobe's three star rating as the equal highest rating received by any mortgage fund in Australia.

This outstanding ratings result comes on top of Money magazine awarding La Trobe the "Best Mortgage Fund in Australia" for 2010 and Smart Investor ranking La Trobe as the reigning top performing mortgage fund in Australia.

Who is Standard & Poor's?

Standard & Poor's is one of the world's pre-eminent independent ratings houses. It has been providing investors with independent research and performance benchmarking for 150 years.

A comprehensive and independent review of La Trobe's Pooled Mortgages Option

For a number of years now, Standard & Poor's has been conducting a fully independent review of La Trobe's Pooled Mortgages Option. This review encompasses all aspects of the fund's operations, including its investment objectives and philosophy, the strength of the investment team and processes, the risk and liquidity management approach, the strength of its portfolio and its long-term performance.

At the end of the review, Standard & Poor's compiles a research paper outlining its findings. It also provides an overall fund rating. A three star rating means that:

"Standard & Poor's has conviction that the manager will generate risk-adjusted fund returns in-line with its relevant investment objectives and relative to its peers."

What comments were made about La Trobe?

Pleasingly, Standard & Poor's made a number of very positive comments about La Trobe in their ratings paper. Not only did it award the Option three stars, but they were at pains to emphasise that their "conviction [in the fund's ability] continues to strengthen."

It is particularly pleasing to get a glowing note of support like this at a time when most other mortgage funds are either frozen, or experiencing difficulties. Whilst we will never rest on our laurels, we are pleased to receive this endorsement from a widely respected independent ratings agency.

In addition, Standard & Poor's commented that:

  • It has conviction in La Trobe's ability to meet its objectives.
  • La Trobe has been able to deliver stable income returns and capital preservation for investors, with investors suffering no losses since inception of the Pooled Mortgages Option in 2002.
  • La Trobe has outperformed all other like mortgage funds in Australia.
  • La Trobe has a long track record in managing loans.
  • La Trobe's senior management is stable.
  • La Trobe's investment process is well documented and articulated.
  • The fund has good diversification, whether considered geographically or simply as a function of the number of loans in which it invests (438 separate loans as at 31 May 2010).

How does La Trobe compare to other funds in the sector?

In its review of the broader mortgage fund sector, Standard & Poor's made a number of observations relevant to La Trobe. In particular, it noted that:

  • 47 funds were rated, but as many as 30 funds remain 'on hold' due to problems experienced on the back of the global financial crisis.
  • The highest rating was 3 stars (the rating received by La Trobe)***

It specifically referred to La Trobe on a number of occasions, including the following:

  • "La Trobe's Australian Mortgage Fund... has continued to perform very well"
  • "The relatively strong performance of the high-yield mortgage fund median relative to the conventional mortgage fund median is solely attributed to the performance of the La Trobe Australian Mortgage Fund - Pooled Mortgages Option. It remains open and has performed over the subgroup benchmark over one, three and five years to February 2010.
  • "We highlight that La Trobe's Pooled Mortgages Option... has successfully grown FUM [fund size] throughout the GFC..."

Why has La Trobe performed so strongly?

From La Trobe's perspective, there are a number of reasons why the Pooled Mortgages Option has outperformed its competitors so consistently. Two of the most important are:

  1. La Trobe knows mortgages

    La Trobe has been lending to borrowers throughout Australia since 1952. We have lent over $10 billion to over 100,000 borrowers. That sort of experience means that we know the market intimately and have a recognised market 'niche' from which we can source the preferred loans for investors.

    As a result, the Pooled Mortgages Option has 438 loans (as at 31 May 2010) diversified across Australia. The maximum allowable investment in any one of these loans is just $1,000,000, the average investment size is about $200,000 and the average loan to value ratio is just 60%.

  2. Mortgage funds are a term investment

    Classically, the mortgage fund was designed to provide investors with capital stability and returns in excess of what could be obtained in cash. Because this involved investing in mortgages with terms of one year or longer, an investment in a mortgage fund was always an investment for a set term.

    However, in recent years, many mortgage fund managers forgot this basic principle and offered their investors access to their funds at short notice (frequently even 'at call'). To do this, they effectively had to set aside a proportion of every dollar invested to meet redemption requests. This did not produce good results for two reasons:

    1. It reduced the amount of money that could be invested in income-generating mortgages (thereby reducing returns to investors); and
    2. It was always going to be insufficient to meet unusually high demand for redemptions by investors.

    Of course, when many mortgage funds met with a surge of redemption requests in 2008-09, they were unable to meet them. So not only have their investors received poor returns (frequently lower than those available from cash investments), but in many cases their investments are still frozen and are unable to be redeemed.

    By contrast, La Trobe has always required a 12 month term investment for the Pooled Mortgages Option3. This better matches the underlying investment asset (mortgages), thereby producing a better return for investors (best in Australia over 1, 3, 5 and 7 years according to independent ratings agency Morningstar#) and avoiding any liquidity stress. At no time in the Pooled Mortgages Option's history have distributions or redemptions had to be frozen or restricted.

Can I read the ratings paper and sector review in full?

La Trobe would be pleased to provide you with a full copy of the ratings paper and sector review. They are available on our website at or by contacting our dedicated investment specialists on 1800 818 818.

How can I invest?

To invest in the Pooled Mortgages Option (currently paying 7.65% p.a. variable1), Cash & Mortgages Option (currently paying 6.20% p.a. variable1) or one of La Trobe's Select mortgages (paying from 7.60% p.a1), please complete the Application form attached to the Product Disclosure Statement available electronically from the link at the top of this email or from our dedicated investment specialists on 1800 818 818.

Best Regards
La Trobe Investment Team


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
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Pooled Mortgages Option


Research Ratings are subject to change. To view the latest research information please visit or 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. ** 3.5 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.*** S&P rating of 3 out of a possible 5 stars indicates that Standards & Poor's has conviction that La Trobe can generate risk adjusted product returns in line with relevant investment objectives and relative to peers.

# As at 28/02/10 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

IMPORTANT: This message, together with the La Trobe Financial website ( 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.

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.

* The award was given to the La Trobe Australian Mortgage Fund, Pooled Mortgages Option.

(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. Investors risk losing some or all of their principal investment.

(2) The rating report is available on the La Trobe website or upon request. The rating is only one factor to be taken into account in deciding to invest.

(3) Withdrawal rights are subject to liquidity and may be delayed or suspended.