Question of the Week

Questions of the Week – income investments

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Question: Do you have a view on the MCP Master Income Trust and whether it has a place in a long-term balanced portfolio?

Answer (By Paul Rickard): I would describe an investment in this style of fund as being part of my “risky fixed interest allocation” and yes, it has a place in a balanced portfolio. Because it is higher risk/higher return – this means (potentially) a relatively small allocation.

In terms of the specific fund (MCP Masters Income Fund):

  • Targeting a return of RBA cash rate plus 3.25%, paid monthly;
  • Material exposure to real estate and development loans;
  • Management fees are ok; and
  • The manager has a good track record.

As with any investment of this nature, please read the PDS thoroughly before making any commitment to invest.

Question: Just wondering if you have heard of Firstmac High Livez, which gives much higher returns than bank deposits? It is an authorized trustee investment. How safe is it?

Answer (By Paul Rickard): I can’t tell you whether it is safe or not. I can’t predict the future. What I can say is that while it is higher risk (and that is why it offers a higher return), the manager has a reasonably strong track record and, because the fund invests in residential mortgage-backed securities, it is effectively quite well diversified. As with all investments, I strongly encourage you to read the PDS.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.

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