Pooled mortgage funds are a popular investment option that allows an individual’s funds to be pooled together with other investor’s funds invested in a diversified portfolio of mortgages. This type of investment has become increasingly popular over the years due to its low barriers to entry, diversification, and attractive returns.
In this article, we will explore who can invest in a pooled mortgage fund and provide some guidelines so you can assess whether a pooled mortgage investment fund is right for you.
What is a Pooled Mortgage Fund?
A pooled mortgage fund is an investment vehicle that pools together funds from multiple investors to invest in a portfolio of mortgages. The fund manager is responsible for selecting and managing the portfolio of mortgages. Investors receive a distribution based on the interest paid by the borrowers in the portfolio during the quarter.
Earn Passive Income With Our Pooled Mortgage Fund
Quarterly distributions
Minimum investment from just $10K
No lock-in investment term
Who Can Invest in a Pooled Mortgage Fund?
Pooled mortgage funds are open to both Wholesale and Retail investors.
A Wholesale Investor is any person or entity who has obtained an accountant’s certificate in the last 6 months stating either of the following:
- That they have net assets of at least $2.5 Million, or
They have a gross income of $250,000 p.a. for the last two years - Or, someone who makes an initial investment of $500,000 or more.
A person or an entity that doesn’t fit these criteria is classified as a Retail Investor.
Differences between investing as a Wholesale or Retail investor
Minimum investment amount
At Active Property Group, Retail Investors can invest in our pooled mortgage fund with a minimum investment of $10,000, whereas Wholesale Investors have a minimum investment amount of $25,000
Fees
A key difference between investing in our Wholesale fund and Retail fund is that Retail Investors are required to pay a Trustee Fee of approximately 0.5%. This is because our Retail fund is operated by an independent Trustee, Primary Securities Ltd, and this fee covers their services.
Investment options
As well as our Pooled Mortgage Fund, every now and then we may have a direct mortgage investment opportunity available. This means the investor can choose to invest in a specific loan rather than a portfolio of loans. Because of the added risk involved in this style of investment it is only open to Wholesale Investors.
The types of entities that can Invest in a Pooled Mortgage Fund
An investor can invest in our Pooled Mortgage Fund as:
- an individual or individuals
- a Trust
- a self-managed super fund (SMSF)
- a company.
Requirements for different entities
Before you can invest with Active Property Group there are some documents we will need to collect from you as part of our ‘onboarding’ procedure. These documents differ depending on which entity you are investing with.
If you’re an individual investor or individuals investing together (e.g. spouses investing via a joint account), we’ll need to obtain certified copies of two valid IDs from each individual.
For those investing with a Trust or a super fund (including SMSFs) you will need to provide copies of two forms of ID from all Directors/Trustees, a certified Trust Deed, and a certified bank statement (or other notice) addressed to the Trust/Superfund.
And for those investing through a company, you will need the certified copies of two forms of IDs from all the Directors.
Should You Consider Investing in a Pooled Mortgage Fund?
Now that we have tackled who can actually invest in pooled mortgage funds, the next question is whether or not a pooled mortgage investment fund is right for you. The answer to this question boils down on your specific situation and your risk appetite.
Are you looking for passive income?
If you’re the type of investor who doesn’t have much free time and wants a passive, set and forget type of investment that allows you to earn an additional income, then you might find pooled mortgage funds appealing as all of the hard work is done by the fund manager. Investors simply wait to receive their distributions each quarter.
Are you looking for a long-term investment?
Those with a longer-term investment plan might find our Distribution Reinvestment Plan appealing. This is when you reinvest your distributions in order to compound the interest by growing the invested amount and earning interest on top of the interest.
If you are looking for a shorter-term investment then a Pooled Mortgage Fund might still be suitable for you as APG doesn’t have a minimum investment period and offers redemptions on a quarterly basis.
Are you looking to grow your wealth?
We are regularly told by new investors that they’re looking to make their money work harder than just sitting in the bank earning very little interest. Our Pooled Mortgage Fund has continued to deliver impressive results which is why we have some investors who have remained invested with us since we first started the fund back in 2015.
When is a Pooled Mortgage Fund not suitable for you?
Pooled Mortgage Funds are not for everybody. Here’s a few instances where it might not be the best option for your situation.
Do you need immediate access to your funds?
If you need to be able to get your funds back straight away then a Pooled Mortgage Fund is probably not right for you. While we offer redemptions on a quarterly basis we are not going to be able to get your funds back to you as soon as you want it. We need some notice as we can’t just take funds back off a borrower in the middle of their loan.
Are you not willing to take on any risk?
As with any investment there is a risk that you may not receive your invested amount back or receive a return. While we make every effort to mitigate the risk of the investment we cannot guarantee that issues may arise. For more info about the risks of the investment please check out our article on this topic here.
Do you want complete control of your investment?
The main thing investors enjoy about our Pooled Mortgage Fund is the passive nature of the investment. You can put your money in and rely on the expertise of the fund manager to provide the best results possible. If you’re looking to have a more granular insight into the details of the investment then our direct mortgage fund is probably more up your alley (Note: this option is only available for Wholesale Investors).
About APG’s Pooled Mortgage Fund
APG’s pooled mortgage fund is used to finance a variety of small business and property development loans. It’s managed by a team of experienced mortgage managers who conduct extensive due diligence on each of the borrowers and all loans are secured by Australian real estate.
One of the main benefits of a pooled mortgage fund is that it is a true, set-and-forget investment providing regular distributions. At APG we’re active, so you can be passive.
The pooled mortgage fund is open to all investors and provides passive income via quarterly distributions. To learn more about the fund you may contact our Investor Relations team and they will gladly answer any question you may have.
This information is of a general nature and does not constitute professional advice. You should always seek professional advice in relation to your particular circumstances. The returns mentioned are not guaranteed. You risk losing some or all of your investment. If you have any questions about investing in private mortgages then please send us an email [email protected] or message us via our Contact Page.
If you have any questions about investing in private mortgages then please send us a message via our Contact Page.
