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Investor Insights - Monthly news for investment professionals 17 December 2015

It’s a truism that the years fly by faster and faster. The year 2015 has been no exception. It is with some surprise that we find ourselves approaching the end of the year. In this edition of Investor Insights, we review recent developments at La Trobe Financial and in investment markets.

For La Trobe Financial, the year 2015 is ending on an exceptionally high note. In October, the La Trobe Australian Credit Fund passed $1 billion in funds under management across over 23,000 registered members. In mid November, La Trobe Financial was awarded ‘Best Investment Management Company’ and ‘Best Mortgage Fund – Australasia’ at the International Finance Awards in London. 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 an unprecedented seventh consecutive year.

We are proud of our awards and independent ratings. But we are very well aware that we are ultimately judged by the value that we provide to our investors. That’s why we are so pleased to have built Australia’s largest and most robust portfolio in the exciting peer to peer investment sector. That’s also why we are so proud of the PMO’s strong outperformance in times of market volatility and low yields.

Market overview – the lost decade

Unfortunately, and once again consistent with our report at the end of last year, the same cannot be said for many alternative investments. And it has been another year of underperformance on the Australian stock market. Although the first half of the year looked promising, reality struck from May onwards and the market actually dropped over the twelve months by 2.86%. Eight years after the market peak of 6,748.90 on 15 October 2007, investors remain down by over 20% even before inflation is taken into account.

As we have said before, this does not mean that investors should avoid stocks altogether. Some individual stocks have produced excellent performance for their investors and dividends can be a valuable source of income. On the other hand, many who talk about market ‘volatility’ often suggest that losses today can be relatively quickly recovered. The truth is that – as we are seeing – it can take a decade or more for a market to recover from a crash and most people at or near retirement simply cannot afford to sit that decade out. They frequently require the money for living expenses. So losses such those experienced since 2007 are – for many investors – permanent and irrecoverable.

For this reason, we repeat our own investment philosophy as often as we can. 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

The year 2015 has been a busy one – we hope that it has been a prosperous and productive one for you and your loved ones. We take this opportunity to wish you and your loved ones a very merry Christmas and a happy new year.

Best regards,

Chris Andrews
Vice President,
Chief Investment Officer

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The above awards and ratings were given to the Pooled Mortgage Option within the La Trobe Financial Credit Fund and may be viewed

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 Credit 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 Credit Fund.
- Any rating is only one factor to be taken into account in deciding to invest.

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.
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 Credit Funds under AFSL 222213. It employs over 150 staff and has managed over AUD$10 Billion 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.

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

This publication does not constitute financial advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek your own financial or other professional advice before acting or relying on any of the content.
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