Investors pleased with Pooled Fund return

Investors pleased with Pooled Fund return

A strong reputation for prudent management and a customer-focused ethos has contributed to the Sydney Wyde Pooled Mortgage Fund outperforming predictions for the latest period.

The six-monthly return for the Pooled Fund from 1 April to 30 September was an impressive 9.02% per annum, net of fees. With the return prior to that sitting at around 8.6%, the numbers are looking consistently strong. SWMM took over as manager of the fund from Cronulla in July 2017, when the return was 4.9%p.a., with a cash rate of circa 3%p.a.. With the current cash rate sitting around 4.35%p.a. and our return reaching over 9%p.a., we’ve made exceptional gains from where we started.  

We were pleased to exceed the expected returns of around 8.5%p.a. to 9%p.a.. This is substantially due to the fact that our loans are generally 12-18-month term style loans, and they’ve finally caught up with the interest rate rises that have occurred in the cash rate. So we're consistently now lending money out around 10.25-10.75%p.a.. Excluding fees, that's starting to filter through to the actual return.

Strong, long-term reputation

The private credit market in Australia is growing and becoming more mainstream, with a raft of new players entering the market. However, many of the newer lenders are also discovering the process of vetting borrowers, lending money out, making a return and recovering the proceeds is not simple and straightforward. Some private lenders in the wholesale lending market have recently fallen foul of the Australian Securities and Investments Commission (ASIC) because of unethical lending.

This has led to an increase in borrowers seeking out reputable lenders with a long-term reputation who have been in the market a long time – and that’s where we are firmly placed.

Proud to be an ethical lender with a solid reputation, we’re fully regulated by ASIC and hold a retail AFSL.  Borrowers and brokers are starting to really understand the importance of that  – particularly those who have been burned in the past by a less-than-reputable lender in the wholesale mortgage market.

Recidivists make up a large portion of our portfolio – both from loans rolling over for another term and from borrowers who have gone elsewhere and are now returning after a poor experience.  

Customer-focused strategy

The key to any lending strategy is to really know your customer. What's their capacity to make interest payments? What’s the exit strategy? If we have to sell the asset, who's the buyer? And, more importantly, understanding that the borrower in the transaction is just as important as the investors. It has to be a mutually beneficial relationship, where both parties win from the transaction.

Over time, we’ve gained a reputation for being very fair to deal with, and our Pooled Fund is now reaping the benefit of many repeat customers. With the average business currently struggling and an unprecedented number of receiverships and liquidations, especially in the construction market, it’s more important than ever that we’re confident with who we lend money to. It’s a lot less risky to lend to a borrower with a proven track record.

It’s particularly encouraging to see the figures for the past six months. Looking forward, the positive outlook for the portfolio is likely to continue and we expect to see similarly strong returns for the foreseeable future.

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‍Note: Past performance is no guarantee of future performance. To invest you need to read the PDS and TMD and complete the application form attached to the PDS.