06 January 2011
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:
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:
- By providing four diverse investment options to give investors flexibility to manage their investments and meet their individual needs.
- 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.
- By providing a diversified portfolio of loans that:
- 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.
- 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.
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.
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.
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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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