- What are Managed Funds?
A managed fund is a type of investment that allows different investors to pool their money together and have it managed by a professional fund manager. The money may be invested across a range of assets, including shares, bonds, and property, with the aim of achieving a return through either capital growth or income.
By investing in managed funds, investors can share in the potential returns from a diversified portfolio without having to directly manage their money themselves. The fund manager is responsible for the day-to-day operations and making all investment decisions based on the fund’s objective and strategy.
Australian Secure Capital Fund operates three pooled mortgage funds, each tailored to a different type of investor. All funds are used to invest in short-term loans secured by registered mortgages over Australian property. Investments are spread across the entire pool of loans contained in each fund and not lent to a particular borrower or an individual security property.
- How do Managed Funds work?
Managed funds pool together money from different investors and this combined capital is then invested in a range of assets by the fund manager. Investors do not own the underlying investments but instead buy “units” in the fund. The number of units you own depends on the unit price when you invest. For example, a managed fund investment of $5,000 at a unit price of $1 gets you 5,000 units.
The unit price, or value of each unit, is re-calculated as the market value of the underlying assets in the fund changes. ASCF calculates the unit price for each of its funds weekly and this published on our website each Tuesday. Since inception the unit price of each unit in each of our funds has remained stable at $1 per unit. You can earn a return on your investment when the unit price increases (known as capital growth) while managed funds can also pay income or distributions according to a specific schedule. You may have the option of receiving cash or reinvesting your income for more units in the fund.
Each managed fund has its own investment strategy. This determines which assets the fund invests in, the level of risk to investors, the expected returns, and the costs of managing the fund. The investment fund manager will use their expertise to decide where to invest the combined capital according to the strategy. They will also monitor the performance of the investments and make changes as needed.
Managed funds are either listed or unlisted. Unlisted managed funds are the most common type of Australian managed investment funds. The price of units is set by the fund manager and not on a traded market. To purchase or sell units in an unlisted managed fund, you must deal directly with the fund manager. Listed managed funds trade on the share market. These funds are typically not actively managed and investors can buy and sell units through a finance broker. ASCF operates unlisted mortgage funds only with all income dispersed to investors at the end of each month.
- Benefits of investing in a Managed Fund
Managed funds give investors access to the financial expertise of a fund investment manager, who makes all decisions on their behalf. This can be especially helpful for those who do not have the time or knowledge to manage their own investments. For example, a managed fund investing in shares may be overseen by a professional stock market analyst. This specialist investment fund management gives investors peace of mind knowing that their money is in good hands.
Diversification is another key benefit of managed funds. By pooling funds, investors can take advantage of a wide range of investment opportunities which can be difficult to access on your own. Managed fund investments are typically spread across different asset classes, market sectors and even geographic regions. A diversified investment portfolio can help to reduce risk and improve returns over the long term because your investment isn’t not tied to a particular asset or security.
There are also some risks associated with managed funds. You have no control over investment decisions and may not know the exact makeup of the fund’s portfolio. The markets may go against the managed fund, which could lead to losses. Some managed funds may also carry additional risks based on the type of assets they invest in. You should carefully examine the investment strategy, asset allocation and the fund’s past performance to decide if a managed investment fund is right for you. The directors of ASCF have over 80 years of experience in banking and property, with all funds invested in diversified mortgages both geographically and property type. To view a detailed summary of our mortgage investments, please click here.
- How to compare Managed Funds
Managed investment schemes can provide a great opportunity to grow your money, but every fund has different strategies, risks and fees involved which also means varying investment returns. It’s important to understand how to compare managed investment funds so you can choose one that meets your needs.
Here are some of the most important things to consider before you invest in a managed fund:
Risk Profile:
The risk level of a managed fund depends on the asset classes the fund invests in. Investments such as cash or fixed interest are lower risk and aim to provide regular income and protect the capital invested. Growth investments like property or shares are higher risk, but offer a higher potential return. Choose an investment fund with a risk profile you’re comfortable with.
Investment Strategy:
Make sure that the managed fund’s investment strategy aligns with your own objectives. Do you want to generate a fixed income or are you looking for long-term capital growth with your managed investments? Every fund will have a different strategy so you need to find one that fits your financial goals, investing time frame, and risk tolerance.
Management Fees:
Managed funds charge a range of different fees to manage your money which can have an impact on your investment return. These may include establishment fees, contribution fees, and withdrawal fees. Be sure to examine all the fees and costs involved so you know exactly how much you’ll be paying.
Long-term Performance:
Look at the fund’s performance over the past 3 to 5 years before making an investment decision. If a managed fund provides strong returns in one year, there’s still no guarantee it will be the same the following year. Long-term results are a better guide for future performance when it comes to reaching your financial goals.
Withdrawal Process:
Managed funds can have restrictions on when you are allowed to withdraw your money, such as a minimum investment term. You may also have to pay exit fees to close your account along with other expenses like capital gains tax. It is important to have a clear investment timeframe and exit strategy when choosing which managed funds to invest in.
Product Disclosure Statement & Target Market Determination:
It is essential to review each fund’s product disclosure statement (PDS) and target market determination (TMD) when deciding where to invest your money. These documents contain all the information you need to know about the mortgage fund which helps you to compare different funds. This includes what assets the fund invests in, the fees, the risks of investing in the fund, the benchmark or target return, and what to do if you have a problem.
To view ASCF’s product disclosure statement (PDS) and target market determination (TMD) click here.
- How to invest in Managed Funds
Once you have set out your financial goals, how long you plan to invest, and what risks you’re comfortable with, investing with Australian Secure Capital Fund is easy. We operate three different managed, pooled mortgage funds, each with its own unique balance of risk and return so you can choose the fund that best suits you.
Our mortgage investments pay targeted distributions rates of 5.25% to 7.10%* per annum, depending on your choice of fund and investment term. To get started, you can apply online or download and complete the New Investor Application Form.
- What is a Mortgage Fund?
Mortgage funds are a type of investment product that focuses on mortgage-backed securities. Different investors pool their money together which is then lent out to borrowers who are looking to purchase residential or commercial properties.
Borrowers from mortgage funds typically pay higher interest rates than they would with traditional lenders. Investors make a return in the form of regular income (called a distribution) derived from the interest and fees of the mortgage loan.
Mortgage funds can allow investors to diversify their investment portfolio and gain exposure to the real estate market without having to purchase property directly.
- How do Mortgage Investment Funds work?
A mortgage secures a loan for a specified property that the borrower agrees to pay back in instalments. If the borrower defaults, the property can be sold to recover the costs of the loan. Investors make money through the fees and interest.
Mortgage funds are typically managed by professional fund managers who use their expertise to find the best mortgage opportunities, including a mix of residential and commercial loans.
In Australia, there are two main types of mortgage investments: pooled mortgage funds and contributory mortgage funds. These managed investment schemes are regulated by ASIC and must comply with the Australian Financial Services Licence (AFSL) requirements. This includes having a Compliance Plan that details how the fund protects both investors and borrowers from unregistered activities.
ASCF only operates pooled mortgage funds with each fund having its own compliance plan registered with ASIC. Please click here to view a copy of our Australian Financial Services Licence.
Pooled Mortgage Fund
This type of fund pools together money from different investors which is then spread across multiple mortgage loans. An experienced investment manager is responsible for selecting the individual loans as well as managing the day-to-day operations. Investors receive the average interest from all the loans, less any management fees, but they have no control over which mortgages the fund invests in.
Pooled mortgage funds typically have a smaller minimum investment amount which makes them more accessible to a wide range of investors. Your investment is shared across a collection of mortgages and not linked to a specific loan which helps to minimise the lending risk. The more liquid nature of pooled funds also means you can generally make a withdrawal soon after the initial holding period. ASCF only operates pooled mortgage funds.
Contributory Mortgage Fund
Unlike pooled funds that invest in a portfolio of loans, contributory mortgage funds focus on the performance of a specific mortgage. Investors choose which mortgages they want to invest in after reviewing the specific features and risks associated with that loan, such as purpose, location, term, and interest rate. The fund manager’s role is to vet and scrutinise investments.
A contributory fund remains open until investors have put in enough money to fund a mortgage loan. Investors generally need to make a greater minimum investment than with a pooled fund. Contributory funds can offer higher returns depending on the specific terms of the loan, but you are unable to withdraw your investment until the loan is repaid. Your risk also depends on the quality of the borrower.
ASCF does not operate contributory mortgage funds.
- What are the benefits of Mortgage Funds?
Although mortgage funds can vary considerably in terms of their underlying assets, they are an attractive investment opportunity for those who aren’t comfortable with investing in the stock market or conventional equity funds. Mortgage fund investments are secured by real estate, meaning that there is a physical asset which can be used to repay the loan even if the borrower defaults.
Mortgage funds are managed investments so investors don’t need to take an active role. The fund manager will use their expertise to manage everything on your behalf. This can be especially helpful when you do not have the time or resources to look after your own investments. Mortgage funds also allow you to invest in the property market without having to take on the full responsibility of ownership.
Mortgage funds are a great way for investors to diversify their portfolios as they can own shares in a range of different residential and commercial mortgages. When you invest in a pooled mortgage fund, you are not just investing in one property. This can help to reduce risk because if one borrower defaults, other borrowers in the portfolio may continue to make payments which means you will still be earning a return.
Mortgage funds also have the potential to generate higher returns than other investments, such as bonds or stocks. This is because the interest rate on a private mortgage loan is typically higher than the interest rate on a bond. The value of properties also tends to increase over time, which can provide gains for investors.
- How to invest in Mortgage Funds
Once you have set out your financial goals, how long you plan to invest, and what risks you’re comfortable with, investing with Australian Secure Capital Fund is easy. We operate three different managed, pooled mortgage funds, each with its own unique balance of risk and return so you can choose the fund that best suits you.
Our mortgage investments have a targeted distribution rate of between 5.25%* and 7.10%* per annum, payable monthly, depending on your choice of fund and investment term. To get started, you can apply online or download and complete the New Investor Application Form.
- Understanding High Investment Returns
When it comes to investments, high returns are generally considered to be those that exceed the market average. There are a range of factors that can affect investment returns, including the different asset classes being invested in, the level of risk involved, and the economic climate. Some investment products that often generate higher returns include growth stocks, real estate, and venture capital. Savings accounts can also generate higher returns in line with rising interest rates.
Although investors may be tempted by high yield investments, they typically carry greater levels of risk. Before choosing an investment based on the potential for high returns, you must consider all variables and make sure the risks are manageable in relation to your investment goals. The key to achieving high returns is understanding which types of investments fit your financial situation, time frame and risk tolerance.
- What is a high yield investment?
High yield investments are those that produce significant revenue for investors, either through interest payments or capital growth. High returns tend to be associated with riskier investments, since investors are taking on a greater degree of uncertainty in exchange for higher expected profits. However, relatively low-risk investments can also yield impressive returns over time, such as a high interest savings account.
The different types of investments that may offer a high return include:
Shares: When you buy shares (also known as stocks, securities or equities) in a company, you become a part-owner. The value of your investment will increase as the value of the company grows. As a shareholder, you may also be paid dividends from the company’s profits. Stock market trading can allow you to build your wealth over time, however if the share price falls then your investment will lose value.
Managed Funds: In a managed fund, your money is pooled together with other investors and then invested by a professional fund manager on your behalf. Each managed fund has its own investment strategy which determines the different asset classes the fund invests in, the level of risk to investors, and the expected returns.
Exchange Traded Funds: ETFs are a type of managed fund that can be bought and sold on the stock exchange. They are designed to track the performance of a particular asset or market index, such as stocks, bonds, commodities, or currencies. Most ETFs are passive investments that don’t try to outperform the market which means the value goes up or down with the index or asset they’re tracking.
Mortgage Funds: A type of managed fund that finances mortgage loans. The investment manager uses their expertise to find the best mortgage opportunities on behalf of investors, who make a return through the interest and fees of the loans. Higher returns are typically achieved by taking on riskier second mortgages.
Peer to Peer Lending: This is a form of alternative financing that allows investors and borrowers to connect directly with each other in an online marketplace. With P2P lending, all the lending risk is taken by investors. If the borrower on a particular loan does not pay their interest on their loan on time, the investor may not get paid their interest until later. These unsecured loans offer higher yields due to the higher risks.
Venture Capital: Venture capital is a type of investment fund used to support the development of new businesses. This funding typically comes from private investors who specialise in providing capital to promising start-ups and emerging companies. Unlike traditional investors, venture capitalists are willing to take bigger risks in order to reap potentially greater rewards from businesses with ambitious growth plans.
- How to choose the best high return investments
High yield investments are an attractive option for investors who want to maximise the profitability of their investment portfolio. In general, you can achieve a high percentage return on investment through two main strategies: investing in high-risk assets or investing in a conservative manner over a long time period.
Regardless of the strategy used, there is no guaranteed way to ensure high investment returns. Past performance is not a reliable indicator of future performance and getting caught up in chasing after unrealistic gains can be a costly mistake. Ultimately, high rate of return investments depend on a combination of factors, including market conditions and the individual preferences of investors.
When considering the best way to invest money with high returns, it is important to research your options carefully and understand the risks involved and potential rewards before making any investment decisions.
- ASCF’s approach to high yield investments
The ASCF High Yield Fund offers investors a targeted distribution rate of 5.75% to 7.10%* per annum depending on the investment term. This fund is able to provide higher targeted returns because the pool includes a prudent selection of second mortgage loans. Borrowers are charged a higher interest rate for such loans which means investors may receive a higher rate of return compared to our first mortgage only funds.
Borrowers turn to us when they require urgent and/or short-term funding and their bank is unable to act quickly enough. As such, the interest rates we charge are higher than traditional bank finance. ASCF High Yield Fund provides short-term first and second mortgage loans to a maximum Loan to Valuation Ratio of 80% for a maximum term of 12 months. Our lending rates for borrowers start from around 8.95% per annum on a first mortgage and around 12.95% per annum on a second mortgage.
Second mortgage loans are subordinated to the primary loan on a property. If a borrower defaults and the property is sold in order to repay the debt, the proceeds from the sale will first go towards repaying the first mortgage loan before any funds are used to pay off the second mortgage loan. For mortgage fund investors, this means that there is greater risk involved with investing in second mortgage loans. However, there is also the potential for higher returns.
To apply for the ASCF High Yield Fund, first read and review the Product Disclosure Statement (PDS) and Target Market Determinations (TMD) to decide if it is right for your personal situation and financial goals. From there, you can invest in this mortgage fund by completing our application form with supporting documents. If you need help with your application, please let us know and we can assist you.