AfsSec Australian Development Mortgage Fund
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AFSSEC Australian Development Mortgage Fund
ARSN: 603 046 377
What is it?
The AFSSEC Australian Mortgage Fund is a managed investment scheme that is registered with ASIC under the Corporation Act. A managed investment scheme is where investors’ money is pooled together to purchase the scheme’s assets, and it is the Responsible Entity, not the investors, who has day to day control of the scheme.
Benefits of investing in the Fund
- Exposure to development loans:
By investing in this Fund, you will have investment exposure to loans, in particular property development loans, secured by mortgages across Australian commercial, residential, rural or industrial property, and other income producing assets.
- Cash income stream:
By investing in this Fund, you get the opportunity to invest in a wide range of diversified mortgages that generate regular income payments.
- Professionally active management:
The Fund is actively managed by our professional management team, in the whole process of management, including compliance, credit screening, project analysis, portfolio construction, risk assessment and performance monitoring.
Risks of investing in the Fund
- Market Risk:
There are a number of general risks of investing in the Fund including macro economic environment, industry, and market system risk and specific factors such as fundamental characteristics of the specific borrower of the mortgage invested in by the Fund, which may affect the future operating and financial performance of the Fund and the outcome of an investment in the Fund. Consequently, the repayment of capital from the Fund is not guaranteed, which means Members may lose some or the entire amount of their investment.
- Interest Rate Risk:
This is the risk that a change in interest rates may adversely affect the value of interest bearing assets in the Fund. Market interest is a dependent variable of the official cash rate set by the Reserve Bank of Australia and demand and supply of money in the Australian monetary system.
- Credit Risk:
This is the risk that a borrower defaults and the Fund is not able to recover the principal amount or interest payments for any loan assets. Any shortfall not covered by the sale of the security property or lender's mortgage insurance (if applicable) may result in a loss of income or capital to Members.
- Concentration Risk:
This is the risk that the assets in which the Fund invests are not diversified. For example, holding a limited number of mortgage loans that are concentrated to particular types of businesses, locations or borrowers leave the Fund significantly exposed to risks affecting those businesses, locations or borrowers. This may have a negative impact on the performance of the Fund.
- Liquidity Risk:
This is the risk that the Fund will not have adequate cash to make withdrawal offers or meet liabilities on a timely basis. It is also the risk that the Fund's assets may be difficult and time-consuming to convert to cash. The Fund is not expected to be liquid because the Fund will primarily invest in property development loans and other types of loans which are relatively illiquid in comparison to other asset classes, leading to potentially long delays in converting assets into cash. This may affect the ability of the RE to make withdrawal offers and to pay withdrawals.
- Valuation Risk:
This is the risk that the Fund's assets are not reflective of current market property values. The property calue at the time of sale may not fully cover the loan amount to be repaid. Accordingly an incorrect valuation may adversely affect the amount the Fund can recover in the event that the borrower defaults.
- Fund Risk:
This is the risk of operating the Fund, including the possibility that it could terminate, fees and expenses could change, systems for calculating unit prices could fail, the RE's personnel may change and IT systems and other technology could change.
- Regulatory Risk:
This is the risk that regulatory change, including changes in laws, regulations and regulatory policy may adversely impact the investments or operation of the Fund and the taxation implications of your investment in the Fund.
- Underperformance Risk:
This is the risk that the Fund will fail to meet its investment objectives of providing regular income and capital stability.
- Related Party Transaction Risk:
This is the risk that the Fund invests in, lends to or transacts with companies, businesses or individuals who are associated with the RE. While such transactions will be at arm's length if they involve parties related to the RE, there is an increased risk that the RE will not monitor such transactions as carefully as transactions or investments which involve parties unassociated with the RE.
- Withdrawal Risk:
Because the Fund is not expected to be liquid, the RE is not obliged to allow withdrawals unless the RE makes a withdrawal offer to all Members.
- Counterparty Risk:
This is the risk that a counterparty to any contractual arrangements with the RE in relation to the Fund either defaults or fails to perform their contractual obligations.
- Documentation Risk:
This is the risk that a deficiency, mistake or error in loan documentation could, adversely affect both the return that the Fund generates on an investment and also the recovery of the initial investment outlaid by the Fund.
Who can invest?
Wholesale and retail investors.
How to apply
To apply, please read and understand the PDS. Please contact AFS Capital Securities Fund management team on +61 3 9013 0630