Q&A

Question: What is a pooled mortgage fund?

Investors money is pooled together and invested in a portfolio of loans that are secured by registered first mortgages over residential, retail, commercial or industrial properties. Investors receive a monthly income called a ‘distribution’ from the interest paid by borrowers. Like any fund, you buy units in the investment fund which is managed and operated by a licensed and responsible entity.

For more detailed information on how the Future Mortgage Income Fund operates please read the PDS

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Question: What are the key benefits of the Future Mortgage Income Fund?

Being a registered managed investment scheme, Future Asset Management International Limited can offer this product to any investor wishing to “pool” their funds with other investors and facilitate lending to borrowers seeking commercial mortgage loans. Each investor then has a proportionate share in the entire mortgage portfolio rather than a specific interest in one mortgage.

The Fund aims to pay investors a variable interest rate as monthly distributions.

Other benefits include:

    • Monthly income paid to your nominated bank account
    • Conservative lending and parameters aimed at reducing risk of capital loss
    • Access to investment in registered first mortgages
    • Diversification across properties and industry sectors
    • Geographical spread of mortgages in New South Wales, Queensland and Victoria
    • Maximum LVR (loan to value ratio) of 70%
    • 12-36 month lending term with variable rates

For more detailed information on how the Future Mortgage Income Fund operates please read the PDS

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Question: Are property valuations relevant before lending to a borrower?

Future Asset Management International Limited intends to ensure the mortgage fund is only working on assets based on the most current valuations. More information around the borrower application process is provided in the PDS.

For more detailed information on how the Future Mortgage Income Fund operates please read the PDS

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Question: Short term or long term investment in pooled mortgage funds?

Long-term. We’ve structured the product so funds are lent to borrowers for a minimum of 12 months and maximum of 36 months. Whilst funds are with the borrower, investors benefit from a monthly payment and can sit back and relax whilst their money works for them.

For more detailed information on how the Future Mortgage Income Fund operates please read the PDS

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Question: Why did pooled mortgage schemes fail during the GFC?

After much research into pre and post GFC pooled mortgage schemes, Future Asset Management International’s view is that many failed due to lax controls on liquidity. Future Asset Management International therefore intends to strictly manage liquidity via withdrawal windows.

FAMI intends to put aside an amount of cash each financial Quarter (being each three-month period ended 30 September, 31 December, 31 March and 30 June) to facilitate the making of a Withdrawal Offer to Investors. A Participation Notice must be submitted to FAMI at least 60 days prior to end of the relevant quarter. The Participation Notice requires Investors to identify the amount they are looking to withdraw from the Fund. This information assists FAMI to budget the amount to make available under the Withdrawal Offer.

For more detailed information on how the Future Mortgage Income Fund operates please read the PDS

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Question: All investments have inherent risk, but what are the primary risks for pooled mortgage funds?

Put simply, liquidity. Post GFC, pooled mortgage fund investors withdrew their funds in a panic, and their investment products allowed these withdrawals. However, Mortgage funds are long-term investments. The Future Mortgage Income Fund will only allow withdrawals after 12 months. FAMI intends to put aside an amount of cash each financial Quarter to facilitate the making of a Withdrawal Offer for investors wanting to redeem. These strategies will mitigate the risk for the fund from failing due to panic withdrawals.

The other risk is who money is lent to. If a lending policy fails to identify high risk applicants, the product ends up lending to most applicants, and is more focussed on profits rather than the risk of borrowers defaulting on loans. Future Asset Management International has a stringent lending policy and will not lend to high risk borrowers, nor will we approve applicants for anything other than a 1st mortgage.

For more detailed information on how the Future Mortgage Income Fund operates please read the PDS

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Question: What happens to pooled funds if a borrower defaults on loan?

Under a pooled model the investors (along with other investors) risk of default is spread amongst multiple loans. Therefore, risk is not compounded by a single borrower. Future Asset Management International will hold first mortgage and title deed to property and liquidate assets to recoup investor funds as quickly as possible in the event of a default.

Under a contributory model the investor has chosen a specific commercial opportunity / borrower. Therefore, the single borrower has defaulted. The specific fund therefore takes a loss. Future Asset Management International holds title deed and will initiate steps to liquidate assets to recoup funds as quickly as possible.

For more detailed information on how the Future Mortgage Income Fund operates please read the PDS

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Small differences in both investment…

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Income is paid to investors…

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This fund operates in unlisted…

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