4 December 2014

La Trobe Financial: ‘Best Investment Management Company’

The year 2014 is ending on a very high note for La Trobe Financial and our investors. In mid November, La Trobe Financial was awarded ‘Best Investment Management Company’ and ‘Best Mortgage Fund – Australasia’ at the International Finance Awards in London. This international recognition, awarded in front of an array of the industry’s best and brightest from 92 countries across the world, confirmed La Trobe Financial’s growing stature on the international stage.

Then, in early December, Money magazine awarded La Trobe Financial’s Pooled Mortgages Option (“PMO”) ‘Best Mortgage Fund in Australia’. This highly coveted prize was awarded to the PMO for a record-breaking sixth consecutive year, confirming the consistency and repeatability of La Trobe Financial’s performance across various market conditions.

At around the same time, the Australian Centre for Financial Studies singled out La Trobe Financial’s Parent to Child, or P2CTM, product for special mention for innovation at the Melbourne Financial Services Symposium. This new and exciting product provides a safe and secure way for parents to assist their children with the purchase of a property, without risking their own home or credit history. It has proven enormously popular against the background of the continuing housing affordability crisis and the difficulty many young people have in saving for a deposit. The newly released website is already generating a staggering 1,000 unique hits per week.

As we frequently say, we are always very pleased to obtain these awards and recognitions from our peers in the financial services industry. After all, when your competitors acknowledge your performance, you must be doing something right. On the other hand, we are always supremely conscious that we are ultimately judged by the value we provide to our investors. We take great pride in this and are again pleased to report that 2014 has been another year of strong outperformance of our peers and benchmarks. For example, our PMO’s continued performance in times of low interest rates continues to attraction attention across the market.

Market overview

Unfortunately, the same cannot be said for many alternative investments. Have pity, for example, on today’s share market investor. Once again, the market has spent the year moving sideways. After a frightening January and February, the S&P/ASX 200 began a promising build from under 5,100 to over 5,600 in mid September. From there, the old patterns kicked in and things went sour. The market plunged back below 5,200, rebuilt to 5,500 and then dropped yet again. At the time of writing, it looks likely that the market will finish 2014 at about the same point it started.

Of course, as any experienced investor knows, this has been the consistent experience since 15 October 2007, when the market peaked at 6,748.90. Following the GFC-induced plunge, the market rebuilt to around 5,000 and has stayed +/- 1,000 points ever since. After seven years, investors remain down by over 20% even before inflation is taken into account.

Now that, of course, is not the end of the story. Dividends have continued to be paid and some individual stocks have produced excellent performance for their investors. However, this extended period of underperformance emphasises a number of rarely-discussed, but fundamental truths of investment.

  • People often talk about share market ‘volatility’ as if losses today will quickly be recovered. The truth is that losses can take years to recover. Our current situation is not unique. It took nine years for the market to recover the losses of the 1987 crash, for example.

  • Talk of ‘average’ returns for an asset class are frequently irrelevant. An average investor at or near retirement in 1987 (or, as appears increasingly likely, in 2007) has their share portfolio ‘in the red’ for up to half of their entire retirement. Throughout that time, they were and are likely to be selling shares for living expenses and thereby crystallising losses. These losses will never be recovered, no matter how well the market performs at some unspecified, future date. For these investors, it is the timing (or ‘sequence’) of returns that has the most pronounced impact on their retirement outcomes.

  • In fact, a share market crash can be quite literally ruinous for many investors if it occurs at or near retirement. Most investors simply cannot afford to rely on the share market to produce adequate retirement outcomes.

We could extend this analysis across asset classes, as we did in the November edition of Investor Insights. Fundamentally, whatever your investment style, the message remains the same. Be alert to the risks of your chosen investment. Ensure that your investments are suitable for your own needs and objectives. At La Trobe Financial, we live and breathe the three golden rules of investment:

  1. Keep it simple, silly (“KISS”): As Warren Buffett once pointed out, investment is not like Olympic diving. You don’t get bonus points for degree of difficulty.

  2. Don’t keep all your eggs in one basket: Diversification is one of the few ‘free kicks’ in investment and reduces the risk of serious portfolio losses.

  3. Getting rich slowly never goes out of fashion.

Merry Christmas from La Trobe Financial

As this is our last Investor Insight for 2014, we take this opportunity to wish you and your loved ones a very merry Christmas and happy new year. We hope that you have a safe and happy holiday season and look forward to sharing more insights on investment in 2015.



Whatever market you’re in... we hope it’s profitable.

Best regards,
Randal Williams, Chief Investment Officer &
Chris Andrews, Head of Funds Management
La Trobe Financial Asset Management Limited



La Trobe Financial is one of Australia's leading independent credit specialist Fund Managers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 123 staff and has managed over AUD$10Billion covering over 100,000 investment grade assets since inception in 1952.

Copyright 2014 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

The following awards and ratings were given to the Pooled Mortgage Option within the La Trobe Financial Mortgage Fund and may be viewed on our website

Ratings And Awards

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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. The PDS is available on our website www.latrobefinancial.com or by calling 1800 818 818. You should consider carefully whether or not investing in the Fund is appropriate for you.
- The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund and may be lower than expected. Investors risk losing some or all of their principal investment. The investment is not a bank deposit.
- Past performance is no guarantee of future performance.
- Withdrawal rights are subject to liquidity and may be delayed or suspended.
- The award and ratings were given to the Pooled Mortgages Option within the La Trobe Australian Mortgage Fund.
- Any rating is only one factor to be taken into account in deciding to invest.

La Trobe Financial Services Pty Limited - Australian Credit Licence Number: 392385
La Trobe Financial Asset Management Limited - Australian Credit Licence Number: 222213

1. Zenith's "recommended" rating indicates that it has high confidence in the manager meeting its objectives. The Zenith Investment Partners ("Zenith") ABN 60 332 047 314 rating referred to in this document is limited to "General Advice" (as defined by section 766B of Corporations Act 2001) and based solely on the assessment of the investment merits of the financial product on this basis. It is not a specific recommendation to purchase, sell or hold the relevant product(s), and Zenith advises that individual investors should seek their own independent financial advice before investing in this product. To view the relevant research information, please visit www.latrobefinancial.com The rating is subject to change without notice and Zenith has no obligation to update this document following publication. Zenith usually receives a fee for rating the fund manager and product against accepted criteria considered comprehensive and objective.
2. SQM Research - 4 stars to 4.25 stars - superior, suitable for inclusion on most Approved Product Lists. To view the relevant research information, please visit www.latrobefinancial.com This rating will not take into account your, or your clients' objectives, financial situation or needs. It is up to investors to consider whether specific financial products are suitable for your objectives, financial situation or needs. Research houses receive a fee from La Trobe Financial for rating the product.
3. Lipper Leaders Rating Total Return (Score – 5) Lipper Ratings for Total Return reflect funds’ historical return performance relative to peers. The ratings are subject to change every month. The highest 20% of funds in each peer group are named Lipper Leader or a score of 5 for Total Return. Lipper Leader ratings are not intended to predict future results and does not guarantee the accuracy of this information. More information is available at www.lipperweb.com. Thomson Reuters Copyright, All Rights Reserved.
4. Australia Ratings (AFSL 346138) makes every effort to ensure the reliability of the views and rankings expressed in its reports and those published on its websites. Australia Ratings research is based upon information known to it or which was obtained from sources it believed to be reliable and accurate at time of publication. However, like the markets, it is not perfect. This report is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore discuss, with their financial planner or advisor, the merits of each rating for their own specific circumstances and realise that not all investments will be appropriate for all subscribers. To the extent permitted by law, Australia Ratings and its employees, agents and authorised representatives exclude all liability for any loss or damage (including indirect, special or consequential loss or damage) arising from the use of, or reliance on, any information within the report whether or not caused by any negligent act or omission. If the law prohibits the exclusion of such liability, Australia Ratings hereby limits its liability, to the extent permitted by law, to the resupply of the said information or the cost of the said resupply.