Which Fund Structure Is right For You?
The single biggest difference between a pooled mortgage fund and a contributory mortgage fund is that in a pooled mortgage fund an investor’s capital and income return is tied collectively to the performance of a diversfied pool of mortgages whereas in a contributory mortgage fund an investor’s capital and income return is tied exclusively to the performance of the specific loan (or loans) in which they select to invest.
The table below contrasts the key structural elements of the KC Diversified Income Fund and the
KC Select Income Fund.
|KC Diversified Income Fund||KC Select Income Fund|
|Pooled mortgage fund.||Contributory mortgage fund.|
|Mortgage Types||First mortgages loans only.||First or second mortgages loans.|
|This Fund is designed for investors who want|
a passive investment experience with their
funds invested in a diversified pool of first
|This Fund is designed for investors who want to|
take an active and self-directed interest in which
underlying first or second mortgage loan(s) their
funds are invested.
|Risk / Return||All investor share equally, according to their|
relative proportional interest in the Fund, to
all of the mortgages within the pool.
|As an investor in the fund your income return as|
well as return of capital are directly linked to the
specific loan(s) that you select.
|$10,000 in the fund.||$25,000 in the fund, $25,000 per loan.|
|Income distributions are generally paid|
monthly in arrears to either a nominated
bank account or reinvested as additional units
in the fund.
|Income distributions are paid in accordance with|
the terms of the underlying loan as outlined in
the Supplementary Product Disclosure Statement
related to the specific mortgage investment.
|The expected income distribution return of|
the Fund is between 7.50% and 9.50% p.a.
The income distributions from the Fund
are variable and subject to changes in the
Funds underlying asset base and the income
received by the Fund each month.
|The expected income distribution return of the|
Fund depends on the loan(s) selected by an
individual investor and the relevant borrowers
meeting their repayment obligations. Typically this
will be between 8.50% and 10.50% p.a. on first
mortgage investments and 14.00% and 18.00%
p.a. on second mortgage investments.
|There is no minimum term, however the|
investment term is subject to Keystone
making a withdrawal offer as outlined in the
Product Disclosure Statement.
|Generally 6 months to 2 years. The investment|
term is directly linked to the underlying loan term
of the particular mortgage investment. The term is
outlied in the Supplementary Product Disclosure
Statement related to the mortgage investment.
|Subject to liquidity, Keystone intends to|
make quarterly withdrawal offers to eligible
investors. When a withdrawal offer is made,
eligible investors in the Fund are entitled to
apply for withdrawal of all or some of their
funds. Further details of the withdrawal
arrangements are contained within the
Product Disclosure Statement.
|When invested in the Transitional Cash Account,|
investors can withdraw their funds with 5 working
days’ notice. When invested in a specific mortgage
investment, investors cannot withdraw their funds
until the loan is repaid.