How to safely diversify your investments away from property
Property has a reputation for being a safe and proven method for growing your wealth, but it’s not the only way to make a profit.
There are dozens of other strategies you can use in an effort to improve your finances, ranging from simple and low-risk (investing your cash in a savings account) to complication and high-risk (investing in shares, stocks and options).
One way to combine the relative stability of property investing with the rewards of a liquid investment is to invest in a fund, such as Firstmac’s High Livez RMBS fund.
The High Livez fund, which was founded in 2011, has achieved a total return of 6.77% per annum since inception and a distribution return of 6.09%, which is far greater than the rates on offer from traditional cash products.
The fund has done this by acquiring a diversified portfolio of investment-grade assets called Residential Mortgage Backed Securities (RMBS), which are made up of loans secured against people’s homes.
“Five years after we launched High Livez, it is amazing that there is no other fund in Australia providing ordinary investors with access to RMBSs,” says Firstmac CFO James Austin.
“In a property-obsessed nation, variable-rate home mortgages are one of the largest asset classes and offer many benefits for investors including relatively-low volatility and reliable income, so it is a travesty that these assets are being left to the banks while ordinary investors are stuck with high-risk shares or term deposits paying less than 3%.”
High Livez holds RMBSs from some of Australia’s most highly-rated financial institutions including Westpac, AMP, the Commonwealth Bank and Suncorp.
Some of the largest investors in RMBSs are the major banks themselves, which is slighting ironic, considering they’re thereby investing in their competitors!
Austin adds that the High Livez fund owns a stake in more than 52,000 mortgages around Australia, which are diversified geographically in different states and territories, to minimise risk and reduce exposure to any local market.