How we balance risk and liquidity

One of the questions we get asked most frequently is what we invest in, and how we assess and manage investments.

In a nutshell, the Merx Wholesale 1 PIE Trust invests in loans to the SME and property investment sectors, secured by local business and property assets. As the fund managers, we invest alongside our investor partners, bringing our 20-plus years of experience as lenders as well as tried-and-tested systems and processes for selecting investment opportunities.

Importantly, our approach is anchored in diversification and maintaining liquidity.

We achieve this by investing in a diverse range of loans to a range of unrelated borrowers and risk profiles, to reduce concentration risk within the single-asset class portfolio and always maintain an element of liquidity. Having numerous loans maturing at different times means we can more efficiently keep the portfolio working and maintain flexibility for investors if there are any requirements for cash to be returned. We like to think it balances consistent returns and flexibility.

Another essential aspect of our strategy is the incorporation of robust security measures.

We take security for every loan we provide. This is generally in the form of mortgage security over property as well as other general and guarantee security. 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 limit our exposure to second mortgages, ensuring second-mortgage securities do not exceed 40% of the total portfolio.

In line with our focus on security, we currently maintain a conservative stance on Loan-to-Value (LVR) ratios. There is no exposure in our portfolio over 60% LVR at the moment. 

Like to learn more about this opportunity? Request our investor brochure here, and don’t hesitate to contact us if you have any questions.  

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.