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INVESTMENT NEWS

22 July 2010

Dear Fellow Investor,

The Select Mortgages Option – choice for discerning investors

In recent times, we have taken many queries from investors interested to learn more about the Select Mortgages Option of the La Trobe Australian Mortgage Fund. In this edition of Investment News, we take the microscope to this outstanding investment option.

What is ‘property debt’?

The Select Mortgages Option is first and foremost an investment in “Property debt”. “Property debt” is an asset class in which investors invest in debt that is owed by a borrower and that is secured by property. In essence, investors contribute all or part of a loan to a borrower. In return, the investors receive:

  • An income stream generated by the loan repayments; and

  • Security in the form of the mortgage and/or other securities provided by the borrower.

Property debt is an ‘income-generating’ asset class, rather than a ‘capital growth’ asset class. By utilising mortgages and other types of securities, property debt also aims to provide a measure of capital stability.

In a diversified investment portfolio, income generating asset classes like property debt are frequently used to “balance” capital growth assets. Further, such asset classes often increase in importance as investors approach and then reach retirement. In such circumstances, investors often increase the proportion of their portfolio in income-generating assets so that they can preserve their capital base, whilst generating income on which they can live.

What is the Select Mortgages Option?

Although private investment in property debt has a long history in Australia, most publicity about the asset class these days tends to be about institutional investment, via superannuation funds and the like.

La Trobe’s Select Mortgages Option has been specifically designed to allow private investors to access this important asset class. In creating the Option, La Trobe has drawn on its nearly sixty years of lending and funds management experience.

How does the Select Mortgages Option work?

Even if they do not invest in the stock market, most investors are familiar with the basic principles of direct investment in shares. First, investors carefully select a specific company in which they would like to invest. This decision is often influenced by factors such as the required rate of return, the industries with which they are familiar and performance of the companies they are considering. Once the decision is made, investors then purchase shares in the company that they have chosen through a broker.

The Select Mortgages Option brings the same principles to bear for investment in property debt. Investors get to select the specific debt in which they would like to invest. As with stock market investing, this decision is influenced by the required rate of the return, the type of security property underpinning the investment and the credit history of the borrower. Once the investment decision is made, investors invest via a ‘Supplementary Product Disclosure Statement’ (“SPDS”) in the specific loan that they have identified.

How do investors select a specific property debt?

Each week, La Trobe publishes a ‘Mortgage Shopping List’ of available property debt investments. The current shopping list can be seen by clicking the link at the top of this email. It provides a range of different property debt investments across Australia.

Investors can identify which of these investments suit their personal investment objectives and then contact La Trobe’s dedicated Investor Liaison team on 1 800 818 818. Investors will then be provided with a detailed SPDS, including a full copy of the valuation report of the security property securing the borrower’s debt and a report on the credit history of the borrower.

Simply by executing and returning the SPDS, investors will have secured for themselves an investment in the specified property debt (minimum investment: $1,000). Interest rates vary from loan to loan. Speaking broadly, they tend to start at around 8% p.a.1 and increase from there.

Who might be interested in the Select Mortgages Option?

As discussed, all investors with a diversified portfolio are likely to have some exposure to income generating investment classes. These classes are likely to increase in importance to an investor as the investor nears and then reaches retirement.

The Select Mortgages Option will also be particularly attractive to active investors who like to exercise a large degree of control over their investments. Over time, these investors tend to develop a significant degree of expertise in selecting the investments that suit their own investment appetites.

How do I learn more?

To learn more about our Select Mortgages Option, please call our friendly Investor Liaison team on our toll free Investor Services number 1 800 818 818. As previously mentioned, our shopping list can be accessed from the link at the top of this email.



Best Regards
La Trobe Investment Team


MoneyMag

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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AdviserEdge

S&P

MorningStar
 #



Pooled Mortgages Option

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SmartInvestor
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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. ** 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 www.morningstar.com.au/fsg.pdf

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.

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.