Boston Managed Investments Limited (ACN 165 345 675) (AFSL 469808)
Phone: 1300 668 699

Boston Diversified Income Fund

Boston Managed Investments Limited is pleased to announce the delivery of our latest fixed income investment product the Boston Diversified Income Fund Unit Trust (BDIF).

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Boston Diversified Income Fund

The Boston Diversified Income Fund Unit Trust is an income style Fund which will commence operations in June 2019. BDIF continues the successful strategy implemented by Boston over the last 9 years, and by Sintex since 2004 and Thinktank since 2006.

BDIF represents the first stage of the Boston supported growth in the Sintex CMBS and RMBS lending platform. This program has been developed in lock step with Sintex as it seeks to expand its origination capacity with the support of both its current senior bank funder (Westpac Banking Corporation), and the other financial participants in its successful CMBS and RMBS warehouses.

Sintex originates mortgage loans across a range of products, each tailored for its target market. As a rule, loans range from $50,000 to $5,000,000, depending on property and borrower type. Maximum Loan to Valuation Ratios (LVR) are conservative and vary according to loan and borrower type. (The maximum LVR of 80% is only available on a sub $750,000 residential loan where Lender’s Mortgage Insurance is in place to protect against any capital loss.)

The average LVR on the Residential loan book is currently 63.81%, and 59.97% across the Commercial loan book. There is no plan to loosen the LVR criteria as this is governed by the covenants imposed by the senior funder (Westpac).

It is intended that BDIF will raise funds progressively to allow Sintex to grow its loan book in a controlled and prudent manner. BDIF will initially serve to restructure the funds currently utilised as credit support in the warehouses and, as growth is achieved, BDIF will seek funds from new investor sources.

Over time, the recycling of capital by way of securitisation will have a number of beneficial effects for Sintex, including a potential compression of interest margin within the warehouses achieved by raising the credit attachment points within the warehouses. This is the same mechanism being used by Boston and Thinktank to support its growth and has proved to be highly successful for all stakeholders.

This program is not a liquidity event and will not provide an “exit” for the existing owners of Sintex. The existing owners and management team of Sintex are fully engaged with this program, and the growth and success of Sintex going forward in a financial and personal sense. Commitments have been made to expand Sintex’ capacities in a number of areas to achieve tightly controlled growth. Those commitments are not funded in any way by BDIF. BDIF invests only in warehouse securities and not in equity positions.

It is expected that BDIF will raise up to $30 million over the next 12 to 24 months which could support a more than doubling of the Sintex loan books. That growth will be both organic by being better able to service the current level of enquiry, and, if appropriate, acquisition of performing loan books.

The key metric for investment in a mortgage origination warehouse is arrears. The capacity to manage and minimise arrears leads directly to the capacity of the warehouse to lend effectively, and more importantly, efficiently. In simple terms, arrears tie up capital that could be otherwise used to fund new loans. Allied to this metric is the ability of a warehouse to absorb capital losses from time to time without disturbing income flow to investors. Defaults are statistically inevitable in a loan book.

Key to Boston’s assessment of the suitability of an investment of this type is the performance of the mortgage manager in managing arrears, and so limiting defaults. Boston Managed Investments Limited. Another key capital protection feature is dynamic loss provisioning, a feature of securitisation transactions, and many warehouses, which provides an increasing buffer against potential losses as time passes. Sintex has demonstrated its capacity to manage and provide for arrears and defaults without any interruption to interest payments to its investors over 12 years.

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FundBoston Diversified Income Fund
TrusteeBMIL Nominees Pty Ltd
ManagerBoston Managed Investments Limited
Investor TypeWholesale/Sophisticated/Professional
StatusComing soon
Inception3 June 2019
Minimum Investment$50,000
Unit Value$1.00
Last quarter return after feesN/A
Coupon PaymentsQuarterly
DRP Available?Yes
Fund Return ProfileHigh
Income Return RiskLow
Capital RiskLow
FundBoston Diversified Income Fund
TrusteeBMIL Nominees Pty Ltd
ManagerBoston Managed Investments Limited
Investor TypeWholesale/Sophisticated/Professional
Inception3 June 2019
StatusComing soon
Minimum Investment$50,000
Unit Value$1.00
Fund Size$4.4m
Number of Investors1
IM Version & Dates3 June 2019
Entry/Exit FeesNil
Management Fees1.20%
Performance FeeNil
Suggested Investment Timeframe3-5 years
Target ReturnBBSW30 + 4.00%
Capital GrowthN/A
Last quarter return after feesN/A
Coupon PaymentsQuarterly
DRP Available?Yes
Fund Return ProfileHigh
Income Return RiskLow
Capital RiskLow

Boston Diversified Income Fund Introduction

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