First mortgage funds are usually a short-term income focused investment strategy.
Most investors understand the importance of diversity within their portfolio, but they may miss some parts of the market when seeking this out.
First mortgage funds (sometimes referred to as Private Debt Funds) can be an advantageous component of any diversified investment portfolio, providing an alternative option within the fixed-income portion of a portfolio. First mortgage funds aren’t new – this is an asset class that has existed in the investment market in Australia for decades.
First mortgage funds are usually a short-term, income focused investment strategy that gives investors access to a stable income via monthly interest repayments. Investors typically would see this income stream as passive, where the fund manager has the role of managing the underlying loans and ensuring interest payments are received on time from borrowers. However, this form of investment is not without risk, and investors should carefully consider which fund they choose to participate in.
Mitigating risks
First mortgage funds allow investors to participate in loans provided by a lender directly to borrowers, who in turn offer back a first registered mortgage over property as collateral in a transaction. This means the lender has the first option over the property in the event that the borrower defaults on the loan.
There is a distinction to be made between pooled mortgage funds and select mortgage funds. Pooled mortgage funds give investors access to a pool of loans in a portfolio, exposing the investor to the full portfolio, whereas select mortgage funds give investors the option to choose specific loans in which they wish to invest.
Investors seeking a consistent monthly income stream backed by Australian property may find this a defensive asset class that provides regular interest payments which might be an attractive alternative when compared to growth-oriented investment options. However, it is essential to evaluate the associated risks before making any investment decisions.
This alternative investment strategy can offer investors a way to avoid the variability of the Australian Stock Exchange and could be well-suited for those seeking genuine diversification within their portfolios.
Unlocking investment opportunities
RMBL’s select first mortgage fund offers simple, streamlined options for investors to gain exposure to quality properties and developments through first mortgage debt. Investors can maintain control over their investment selection, regardless of the size of their investment in a loan or multiple loans.
Current investment opportunities exist in several security categories, including upcoming residential land and built-form developments, and regional town subdivisions, to name a few.
As one of Australia’s leading select first mortgage funds, RMBL ensures you maintain control over your own investment, giving you flexibility and choice.
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This article is for informational purposes only and does not constitute an offer, or recommendation to invest in the Fund.
This information is general in nature and does not take into account your personal objectives, financial situation, or needs. Before making any investment decisions, consider seeking independent professional advice. All investments carry risks, and past performance is not a reliable indicator of future results.
You should read the PDS and TMD available at rmbl.com.au and consider whether an investment in the Fund is right for you before investing.
