The Fund has four investment options with the Pooled Mortgages Option (PMO) being the subject of Zenith’s Product Assessment Report. The PMO’s objective is to deliver consistent monthly income returns to investors with capital stability and is suited to investors with medium to long-term investment horizons (3-4 years).

The Fund is managed by the La Trobe Group which is a fund manager which specialises in credit, targeting the niche segment of low-doc lending. La Trobe Financial was founded in 1952 and currently has total funds under management of $1.66 billion.

Zenith’s View

Zenith classifies the Fund as a High Yield mortgage fund, owing to its predominant focus on more aggressive lending than the average conservative mortgage fund with in excess of 72.5% of the loan book made up of low-doc loans.

While operating primarily on low-doc lending, the Manager applies a full-doc type approach to credit assessment as well as maintaining strict risk measures that prevent the Fund taking on unwarranted risk. We see the lending processes as being conservative in comparison to other high yield mortgage funds operating in the market and risks are well controlled via stringent lending criteria, and maintaining proactive and robust arrears management.

Zenith regards the PMO as being most suited to those seeking capital stability and an income return which should solidly exceed the cash rate through investment cycles. This means however that investors should only consider this fund if they have a higher risk tolerance.

La Trobe Financial have carved out an impressive track record in this sector driven by their deep lending and continued effort in refining their low-doc lending process.

Key structural advantages have assisted the PMO in being able to sidestep most of the issues which have plagued the sector since 2008 which have resulted in frozen redemptions, constricted distributions and impaired operations for the many of the Fund’s peers.

Overall, Zenith regards the PMO as an attractive offering in what has historically been a difficult asset class.

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