Mortgage funds ‘no replacement for cash’
Leading ratings house Morningstar has placed the current situation surrounding mortgage funds in context, issuing a series of assessments in which it reinforces that investors looking for liquidity or a guarantee “should look elsewhere”.
The ratings house gave the assessment at the same time as placing four key mortgage funds ‘on hold’ — those of Australian Unity, AXA, Marinerand Perpetual, albeit that it reinforced that the underlying strategies of those mortgage funds and the people running them were sound.
However, the ratings house issued cautionary words about the manner in which the mortgage funds needed to be viewed by investors saying that “while investors like the stable return patterns attached to mortgage funds, the unlisted assets that provide these returns are less liquid than cash, so these funds are not replacements for cash funds”.
“Investors looking for short-term liquidity or a guarantee should look elsewhere,” the Morningstar assessment said.
“Longer-term investors may still find the higher returns on offer here suitable reward for the additional risks.”
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
