Australian Unity Investments (AUI) has changed the redemption policy on its Mortgage Income Trust (MIT), with investors now able to retrieve a portion of their units purchased on a monthly basis.
The new arrangement begins on 1 June and allows MIT investors to redeem up to 1 per cent of their total investment or a minimum of $1000 every month.
“If the investor is holding less than $1000 they can take the full amount out,” AUI head of mortgages Roy Prasad said.
Redemptions from the fund on a monthly basis is a permanent change to the product, but the amount investors will be able to redeem will rise over time.
“The liquidity levels in the fund have continued to stabilise, allowing us to introduce this capped monthly redemption policy. We believe it strikes a balance between giving our investors improved access to their capital while at the same time allowing us to continue managing the fund appropriately for all investors in circumstances made difficult by the bank guarantee,” Prasad said.
Before making the change AUI reassessed the role mortgage funds could still play in an investor’s portfolio and whether or not there was going to be ongoing demand for these types of products.
The response was positive, but Prasad said the fund is likely to now attract investors with a longer investment horizon.
The fund manager implemented quarterly capped redemptions for both of its mortgage funds back in October last year, in response to investors wanting to cash out their units due to the government bank guarantee.
The monthly redemption policy is also earmarked for the AUI High Yield Mortgage Trust, but Prasad said this fund was not yet in a position for the implementation of such a change.
