Investing alongside investors – it’s a core principle of the Wholesale 1 PIE Trust. The experienced management team have ‘skin the game’, and have the same risk and potential rewards as investor partners.
To explore how their personal journeys as wholesale investors shaped the fund, we talked with Merx’s managing director Andrew Dunning about his goals, challenges, principles, and the key learnings he collected en route.
From schoolyard beginnings to banking
As Andrew recalls half-jokingly, his journey as an investor didn’t start in the corporate boardroom but in his schoolyard – lending lunch money to friends. “That was back when you could buy a pie for just $1.50. But now the interest rates are also a lot lower than then,” Andrew says. “Thinking about it, I guess even back then I enjoyed lending my resources to help others get into PIEs – just different kind of pies.”
Fast forward to 2002, Andrew’s career began in banking right after university with ANZ. “The first significant job I had was managing a lending book, which is where I honed my passion for lending, risk management, and client assessment,” Andrew says.
In the subsequent 10-plus years, Andrew covered different relationship banking roles before becoming regional director of Property Finance, and then senior manager Commercial & Agri Banking. He likes to refer to his decade at ANZ as his ‘apprenticeship’ in commerce, relationship management, and of course, lending.
The epiphany that changed everything
It was while working at ANZ, about 10 years ago, that Andrew had an epiphany – the ‘aha moment’ that really kickstarted his path as an investor. At the time, with a young family to raise, he realised that with thoughtful planning he could transition from a salary-dependent life to a self-sufficient existence, funded by investment income. He just needed to find the right way.
“I explored different avenues, from buying existing businesses to venturing into property,” Andrew says. “Ultimately, I couldn’t find good investment opportunities – something that provided a decent return without imposing excessive risks or a major concentration of risk in just one investment.”
So, proactivity turned out to be crucial: if he couldn’t find the opportunities, he would create them himself. He decided to start lending his personal funds to a range of business owners and property investors and developers, which delivered the yield that he and his family were seeking. That’s how Merx was born: “It took us a long time to get here, but it was kind of driven by this motivation to try and create income for life,” Andrew says.
And there was more than his own family’s financial independence on the radar. Once Merx was well-established, Andrew set out to open up these wholesale investment opportunities to a broader pool of like-minded wholesale investors. In mid-2022, this led to the launch of the Wholesale 1 PIE Trust.
The principles behind the Trust
“With the Merx Wholesale 1 PIE Trust, we are bringing it all together to build the fund we want to invest in when we get older,” Andrew says. And the principles that Andrew and the management team have learned along the way are reflected in how the Wholesale 1 PIE Trust has been structured.
Alignment of interests differentiates the Trust from other wholesale investment opportunities: it’s a proposition built from years of personal experience and thoughtful planning. “We envisioned this fund as a platform that allows our investor partners to invest alongside us, in the same types of loans that we invest in ourselves, to create the potential for good returns and yield in everyone’s portfolios.”
The other key principle is minimising risk concentration through diversification. Diversifying investments across multiple loans to multiple businesses, in a wide range of industries means mitigating the potential risk of a single loan not delivering. “The reality is, you can never eliminate risk. You just want to limit your risks and manage them well, and we do so by incorporating robust security measures,” Andrew says. “At least 50% of our portfolio must be secured by first mortgages, with our current exposures being more than 70% first mortgage security. Plus, we ensure second-mortgage securities don’t exceed 40% of the total portfolio.”
And last but not least, long-term planning. Looking back, Andrew’s whole investment journey has been a tale of balancing risk and rewards, keeping long-term planning always top of mind. He learned this lesson from a mentor early in his career: the importance of having an overall plan and using it as a compass. Patience, Andrew points out, is the key. “At the end of the day, we want to be happy, patient investors who stick to the plan and grow together over the longer term.”
Like to become part of this journey?
The Wholesale 1 PIE Trust is a reflection of the management team’s own journey and personal commitment. If you’d like to become part of this journey, click here to learn more and give us a call on 09 215 9364 to discuss further. We look forward to hearing from you.
Note: This article is intended to provide general information and does not constitute financial advice. We recommend you speak with a financial adviser for advice tailored to your individual circumstances. Investors must qualify as Wholesale Investors as that term is defined in sections 3(2)(a) – (c) or 3(3)(a) of Schedule 1 of the Financial Markets Conduct Act (“FMCA”). The Trust is not suitable for retail investors.