Newly-formed Affinity Funds Management has launched its first product, a low risk mortgage fund.
Affinity has been formed by the former Melbourne-based Howard Mortgage Trust team of Peter Gibbs, Martin May and Brett Macgillivray.
The new Affinity Commercial Mortgage Trust is to declare its quarterly rate in advance, which May claims, is unusual in the mortgage trust sector.
“We put the investor first by paying a healthy declared rate before we even receive our management fees,” he said.
“At the end of the quarter we then calculate whether we can pay a bonus return after deducting management fees and expenses.”
Affinity declared a rate of 6.4 per cent at the end of June for the September quarter. It was boosted to 6.55 per cent at the end of September due to stronger performance from the trust.
“Because our costs are largely fixed and we know at the beginning of the quarter the income we will receive, there is no reason why we can’t offer investors the benefit of a declared rate in advance,” he said.
May said the strong performance of the trust was confirmed by the 6.37 per cent declared rate for the year ending September and the rate for the December quarter has been set at 6.55 per cent.
The fund has raised $60 million from institutional investors and has now been opened for retail investors.
It will only loan up to 75 per cent of the property valuation and will not lend on development or construction projects which helps keep the risks low, May said.
For retail investors the minimum investment is $1,000 and there is a regular savings plan with minimum investments of $250.
The trust has been rated by Managed Investment Assessments as ‘attractive’, which is the highest rating for mortgage trusts.
