Daniela Crisafi
Australia Ratings has affirmed its Operational Capability Assessment (OCA) ranking of ‘Strong’ on La Trobe Financial Asset Management Pty Ltd (LFAM) – in its role as Responsible Entity for the La Trobe Australian Mortgage Fund.
A ‘Strong’ ranking indicates a strong capacity to perform, supported by a few superior operational abilities and adequate financial status (see ranking scale below).
The OCA ranking continues to reflect the embedded processes and procedures adopted by LFAM to successfully execute the La Trobe Australia Mortgage Fund’s investment mandates and deliver the expected income to investors. It also incorporates consideration to the strength of its related entity, La Trobe Financial Services (LFS) which provides resources and systems to allow it to undertake its role as Responsible Entity.
Australia Ratings analyst, Daniela Crisafi said “The La Trobe Australia Mortgage Fund continues to perform consistently due to sound and prudential risk management, strong governance framework and skilled and experienced management”.
Australia Ratings’ assessment of LFAM’s operating capabilities included a review and ranking of a number of operational components, ownership, performance, financial adequacy and stability. The OCA ranking reflects the following key strengths of LFAM:
- LFAM (as part of the La Trobe Financial Group) is an experienced mortgage origination and management group with a very tight focus on compliance;
- A very strong governance framework;
- Skilled staff who have a demonstrated strong track record;
- Net tangible assets exceeding the minimum required under LFAM’s Australian Financial Services Licence (AFSL) issued by ASIC.
The OCA ranking also reflects the following key risk factors:
- Reliance on the effective operation of LFS to which LFAM has transferred its role as Investment Manager.
- LFAM is a lender and manager of specialist mortgages and the Fund is exposed to a higher level of loan arrears than industry averages for prime residential mortgages. While the Fund’s levels of arrears are comparable to arrears on non-conforming loans in the market, the management of the Fund’s arrears is essential in protecting the expected returns of members.