Why diversification matters

As long-time investors, we’re no strangers to the ups and downs of the markets. Recent years alone have brought major market events and aggressive monetary policies that caused significant moves across property, equity, fixed income, and commodity markets.

This volatility underscores the need for a diversified investment portfolio – a lesson we have taken to heart in developing the Merx Wholesale 1 PIE Trust.

The value of diversification

As a risk management strategy, diversification involves mixing a variety of investments within a portfolio. The rationale behind it is that, over the long term, a portfolio of different kinds of investments is likely to yield higher returns and pose a lower risk than any individual investment found within the portfolio.

There are different layers of diversification:

Geographical diversification – This entails spreading investments across different countries and regions, as the economic fortunes of countries and regions can rise and fall at different times due to a variety of factors.

Diversification across asset classes – Each asset class has its own risk and return characteristics and tends to behave differently under various market conditions. So, the goal is to invest in a mix of assets that are not correlated, to smooth out the overall portfolio performance.

Diversification within asset classes – The next layer is diversification within a single asset class. For example, within equities, it’s possible to diversify across different sectors or by company size.

Effectively applying these layers of diversification can lead to a portfolio that’s capable of withstanding changing market conditions. Like to know how we applied this core principle to the Merx Wholesale 1 PIE Trust? Read on.

The role of diversification in our own investment journey

Through our many years as investors, we have learned first-hand the value of a diversified portfolio: it’s always about managing risk, rather than avoiding it.

When we started looking for the kind of debt fund we would want to be invested in, now and in the future, diversification was one of the key features we were after. However, after surveying the market, we couldn’t find an investment option that provided diversification alongside alignment of interests, flexibility, and tax efficiency.

So, we decided to create that investment opportunity for ourselves and likeminded wholesale investors. And this led us to launch the Merx Wholesale 1 PIE Trust.

The Merx Wholesale 1 PIE Trust offers the third type of diversification outlined above: diversification within a single asset class. The underlying loans are diversified across a broad range of unrelated borrowers, namely property investors/developers and small business owners operating in different sectors. In other words, even though the investment is tied to a singular type of asset – secured loans – the diversification comes from the range of businesses these loans support.

What’s more, the unit trust structure means each investor owns a share of the total portfolio of loans, as opposed to being exposed to individual loans. This approach reduces concentration risk within the portfolio, offering a lower-risk, more efficient and flexible investment vehicle for all involved.

That’s why the Merx Wholesale 1 PIE Trust can be a distinctive opportunity for wholesale investors looking for ways to complement their overall investment portfolio.

Like to become part of our 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. Potential investors with Merx 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.

30.75

%

Returns Since Inception

Returns based on an actual company investor account with net returns re-invested monthly. Past performance is not a guarantee of future performance. The fund was established 30 June 2022 and made its first investments in September 2022.

Why Invest with Merx

About the Merx Wholesale 1 PIE Trust: Structure, principles: management and more

Comments from Merx Investors

I have enjoyed investing with Merx and learnt a lot through the process too. Merx have been very transparent with what they do and the communication has been consistent. Wouldn’t be a testimonial without mentioning the returns too, thanks for those. Looking forward to being a part of the journey for years to come.

Luke

There's a lot to be said for a fund where the managers invest alongside their investors. It's a real partnership where the interests of investors are prioritised. The returns to date have been great, the unit structure gives me the flexibility I want, and I've been really impressed with the communication.

Aaron

I've been impressed by how Merx looks after their investors - from how the fund is structured for redemption, reinvestment, and tax efficiency - to the communication and care in understanding my investment goals. It makes a difference - investing alongside managers who are also invested in the fund.

John

Aligned Interests

Aligned interests is a core principle of the Merx Wholesale 1 PIE Fund. As the Trust’s management team, we personally invest alongside our investor partners. We have the same risks and potential returns as our investors.

Building an investment portfolio for the long term

Investor's Journey: Merx Director,
Andrew Dunning

The role of economic cycles in investment

Get the detail – fund description, management, fees, risks and more. Request the Merx Wholesale 1 PIE Trust Investor Brochure here.
Request the Merx Wholesale 1 PIE Trust Investor Application form here. Note: the fund is not suitable for retail investors.

Merx Wholesale 1 PIE Trust Returns

Year 1 actual net return (on company investor portfolio reinvesting)

20.13%

 

Average monthly distribution (annualized)

17.41%

 

Returns since inception

30.75%

Returns based on an actual company investor account with net returns re-invested monthly. The fund was established 30 June 2022 and made its first investments in September 2022. Past performance is not a guarantee of future performance.

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*Returns are net actual returns distributed to investors (annualized) – net of all fees and costs before tax. The fund was established 30 June 2022 and made its first investments in September 2022. Past performance is not a guarantee of future performance.

Investor Brochure

Important information for investors

Investment in the Trust is open only to wholesale investors as set out in schedule 1, clauses 3(2)(a)-(c) and 3(3)(a) (inclusive), or persons who are otherwise not required to receive disclosure under Part 3, of the Financial Markets Conduct Act 2013 (“FMCA”).

Investor Application

Important information for investors

Investment in the Trust is open only to wholesale investors as set out in schedule 1, clauses 3(2)(a)-(c) and 3(3)(a) (inclusive), or persons who are otherwise not required to receive disclosure under Part 3, of the Financial Markets Conduct Act 2013 (“FMCA”).