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