ASIC Benchmarks

ASIC has developed 8 Benchmarks for unlisted mortgage schemes that can help you, the retail investor understand the risks, assess the rewards being offered and decide whether these investments are suitable for you.

ASIC requires that responsible entities of unlisted mortgage schemes in which retail investors invest should address the Benchmarks in their disclosure on an if not why not basis.

Assured Management is pleased to advise that its Mortgage Fund meets all of the applicable ASIC BENCHMARKS with the exception of Benchmark 5 (refer to page 6 of the PDS). In order for you to better assess your investment in the Assured Mortgage Fund we have set out the way in which Assured Management has met these Benchmarks. Prior to considering these Benchmarks you must first understand that the Assured Mortgage Fund is a Contributory Mortgage Scheme and not a Pooled Scheme and accordingly investors receive a specific interest in a mortgage.

ASIC BENCHMARK 1 - LIQUIDITY

ASIC REQUIREMENTSASSURED MORTGAGE FUNDS POSITION
For a pooled mortgage scheme, the responsible entity has cash flow estimates for the scheme that:
  1. demonstrates the scheme's capacity to meet its expenses, liabilities and other cash flow needs for the next 12 months;
  2. are updated at least every three months and reflect any material changes; and
  3. are approved by the directors of the responsible entity at least every 3 months.

Statement: The benchmark is not required to be met by Assured Mortgage Fund.

Explanation: Assured Mortgage Fund is not a Pooled Fund.

ASIC BENCHMARK 2 - SCHEME BORROWING

ASIC REQUIREMENTSASSURED MORTGAGE FUNDS POSITION

The responsible entity does not have current borrowings and does not intend to borrow on behalf of the scheme.

Statement: This benchmark is met.

Explanation: The fund does not have any borrowings against the Fund property.

ASIC BENCHMARK 3 - LOAN PORTFOLIO AND DIVERSIFICATION

ASIC REQUIREMENTSASSURED MORTGAGE FUNDS POSITION

For a pooled mortgage scheme:

  1. the scheme holds a portfolio of assets diversified by size, borrower, class of borrower activity and geographic region;
  2. the scheme has no single asset in the scheme portfolio that exceeds 5% of the total scheme assets;
  3. the scheme has no single borrower who exceeds 5% of the scheme assets ; and
  4. all loans made by the scheme are secured by first mortgages over real property (including registered leasehold title).

Statement: This benchmark is not required to be met by Assured Mortgage Fund.

Explanation: Assured Mortgage Fund is not a Pooled Fund.

ASIC BENCHMARK 4 - RELATED PARTY TRANSACTIONS

ASIC REQUIREMENTSASSURED MORTGAGE FUNDS POSITION

The responsible entity does not lend to related parties of the responsible entity or to the scheme's investment manager.

Statement: This benchmark is met.

Explanation: The Fund does not lend to related parties of the Responsible Entity or the Manager.

ASIC BENCHMARK 5 - VALUATION POLICY

ASIC REQUIREMENTSASSURED MORTGAGE FUNDS POSITION

In relation to valuations for the scheme's mortgage assets and their security property, the board of the responsible entity requires;

  1. a valuer to be a member of an approptiate professional body in the jurisdiction in which the relevant property is located;
  2. a valuer to be independent;
  3. procedures to be followed for dealing with any conflict of interest;
  4. in relation to security property for a loan, an independent valuation to be obtained; (i) before the issue of a loan and on renewal; (a) for development property on both an 'as is' and 'as if complete' basis; and (b) for all other property, on an 'as is' basis; and (ii) within two months after the directors form a view that there is a likelihood that a decrease in the value of security property may have caused a material breach of a loan covenant.

Statement: This benchmark is not met.

Explanation: The Responsible Entity meets all of the benchmark requirements except for the obtaining of a valuation upon renewal/rollover of a loan. A valuation is obtained on every occasion with respect to a new loan, however upon the renewal/rollover of an existing loan the responsible entity may not require a full valuation and retains the discretion to seek an appraisal from a local real estate agent with respect to the security property. You are referred to paragrapah 6.4 in the Product Disclosure Statement.

ASIC BENCHMARK 6- LENDING PRINCIPLES - LOAN-TO-VALUATION

ASIC REQUIREMENTSASSURED MORTGAGE FUNDS POSITION

If the scheme directly holds mortgage assets;

  1. where the loan relates to property development - funds are provided to the borrower in stages based on independent evidence of the progress of the development;
  2. where the loan relates to property development - the scheme does not lend more than 70% on the basis of the latest 'as if complete' valuation of property over which security is provided; and
  3. in all other cases the scheme does not lend more than 80% on the basis of the latest market valuation of property over which security is provided.
Statement: The benchmark is met.

ASIC BENCHMARK 7 - DISTRIBUTION PRACTICES

ASIC REQUIREMENTSASSURED MORTGAGE FUNDS POSITION

The responsible entity will not pay current distributions from scheme borrowings.

Statement: The benchmark is met.

ASIC BENCHMARK 8 - WITHDRAWAL ARRANGEMENTS

ASIC REQUIREMENTSASSURED MORTGAGE FUNDS POSITION

Liquid schemes

For liquid schemes:

  1. the maximum period allowed for in the constitution for the payment of withdrawal requests is 90 days or less;
  2. the responsible entity will pay withdrawal requests within the period allowed for in the constitution; and
  3. the responsible entity only permits members to withdraw at any time on request if at least 80% (by value) of the scheme property is; (i) money in an account or on deposit with a bank and is available for a withdrawal immediately, or otherwise on expiry of a fixed term not exceeding 90 days, during the normal business hours of the bank; or (ii) assets that the responsible entity can reasonably expect to realise for market value within 10 business days.

Non-liquid schemes

For non-liquid schemes, the responsible entity intends to make withdrawal offers to investors at least quarterley.

Statement: This benchmark is met.

Explanation: As the Assured Mortgage Fund is a Contributory Fund and not a Pooled Fund, once an Investor's money is invested in a loan the investment will remain in that loan until it is repaid and the investor has no rights to seek withdrawal of its investment at any time. You are referred to Paragraph 4.5 of the Product Disclosure Statement.