06 January 2011

Dear Investor,

New Year Resolutions

Welcome to the first edition of Investment News for 2011. The entire staff and management of La Trobe wish you a very safe and prosperous new year.

The year ahead promises to present a unique set of challenges for investors. From stuttering economies in Europe and the US to the rise of Asia, the world is adjusting to new economic realities. At a macro level, Australia is well-placed to continue to benefit from the commodities boom, but care must be taken to ensure that we are not ravaged by the 'Dutch disease', whereby increased commodity exports are offset by negative effects for other sectors of the economy.

At an individual investor level, although each year inevitably brings its own set of challenges, the basic response of a sensible investor remains the same. We have previously written of the three immutable rules of investing. At the start of the new year, it is timely to review them:

  1. Never put all your eggs in the one basket:

    Diversification is a key principle of investing. La Trobe provides investors with diversification on a number of levels:

    1. By providing four diverse investment options to give investors flexibility to manage their investments and meet their individual needs.

    2. By providing different risk/return profiles for each of the investment options so that investors can match their investments with their own risk/return appetites.

    3. By providing a diversified portfolio of loans that:

      1. For the Cash & Mortgages and Pooled Mortgages Options, spreads an investor's risk beyond a single loan to a pool of loans that is diversified in a number of ways, including by borrower, by geography and by sector.

      2. For the Select Mortgages and Special Situation Mortgages Options, allows investors to select the individual mortgage or pool of mortgages in which they wish to invest.

  2. A higher rate of return generally equals higher risk:

    At different times in the economic cycle, spruikers will arise to promote their version of the perennial 'get rich quick' schemes. Exotic financial instruments, margin loans and the like tend to feature prominently. Complexity is also a notable common feature and frequently makes it very difficult for investors to assess the risks inherent in the investment. Unfortunately, as many investors have found out to their woe, complex schemes offering very high rates of return generally also have very high risks of failure.

    By contrast, La Trobe seeks to provide investors with investment options that are straightforward in design, so that the risks associated with each investment can be readily assessed.

  3. Getting rich slowly will never go out of fashion:

    In one of his annual addresses to investors in Berkshire Hathaway, Warren Buffett stated:

    "Investing is not like Olympic diving... you don't get extra points for degree of difficulty."

    This sums up the third immutable rule of investing. Keep it simple and don't invest to get rich overnight on speculative tips, but invest for longer periods getting modest stable returns which will be repeatable.

STOP PRESS! La Trobe receives the highest rating of any mortgage fund in Australia

La Trobe is pleased to announce the results of the latest independent research review of the Pooled Mortgages Option. The review was conducted by Adviser Edge/SQM Research, who increased the Option's rating from 3.5 stars to 3.754 stars - the highest rating given for any mortgage fund in Australia.

In providing this rating, Adviser Edge/SQM emphasised the following points:

  • The Fund's outperformance of its peers and benchmark since inception (the Fund being the top performing substantial mortgage fund over 1, 3, 5 and 7 years)

  • The Fund's stable and consistent returns over the years

  • The high level of skills, experience and resources available to the Fund's management and team

  • The strong market and niche developed by the La Trobe Group since its inception in 1952

  • The diversification of the Fund's loan portfolio

You can obtain a copy of the research report from our website at www.latrobefinancial.com.au or by calling our friendly investor liaison team on 1800 818 818.

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.