When selecting investment funds, many investors focus primarily on headline distribution rates, often equating higher rates with ‘the best’ returns. However, this approach can overlook critical factors and can significantly impact the safety and profitability of your capital. At GPS Investment Fund Limited (GPS), we believe that understanding the ‘behind the scenes’ of who you’re investing with is just as crucial, if not more so, than the distribution rate alone.
Here’s what to consider if you, or someone you know, is looking at investment funds:
The Fund’s History and Track Record:
While it may seem obvious, looking at the fund’s track record is a critical first step. If a temptingly high rate of return is being offered, first check, does it have a track of successful projects, or is an increase in return suddenly being offered out of nowhere? If you were to view a line graph of any GPS fund history, you’d be looking at a rather boring, straight line. This, however, is a key indicator that we’ve been providing consistent returns for the projects we fund. This longevity and consistency is not just about numbers, it reflects our commitment to stability and reliability in the investment landscape.
The Fund’s Financial Stability and Capital Base:
Next, check the financial stability and capital backing of the fund you’re considering. At GPS, we are proud to be funded by a broad investor base of both critically necessary retail and wholesale investors, not by overseas banks or foreign money that might pull out in tough times.
This breadth of investors ensures that, unlike some lenders who might be waiting to see if their money will dry up, GPS’s financial stability is rooted in a loyal Australian investor base. This further assures that we have the capital to support our projects, even in the unlikely case of unforeseen challenges.
Who is Managing Your Investment:
It’s also vital to consider who the team is that’s managing your money. As many would already know, at GPS, our investors have the reassurance that our team is also invested in our funds. This personal touch means you are not just another account number; you are a valued client with a direct line to the decision-makers. We believe in transparency and consistency, and our commitment to that is displayed through the fact that you’re truly investing with us.
When selecting an investment fund, ask yourself, does this organisation offer transparency about their team? Who is behind the fund I’m investing in, and who at the company also has skin in the game? If a Fund Manager doesn’t have faith in their product, should I?
Quality and Security of the Product:
Not all investment funds are created equal, which is why the consideration of ‘how secure is the security?’ should be added to your assessment. At GPS, we specialise in Registered First Mortgages (RFM), an investment approach backed by Australian Real Estate which provides an added layer of security to investors. This means we hold the mortgage over the property, making it easier to manage risks and ensure smooth project progress.
When assessing a fund’s security, it’s also important to consider the quality of the product at hand. An RFM investment isn‘t guaranteed against risk, especially if the fund‘s management team aren’t specialised in the area and aren’t selecting quality options.
In summary, we encourage you to look beyond the headline numbers and consider the fund’s history, financial stability, management quality, and the quality of the product.
We’re proud to say that GPS embodies each of these vital considerations in the opportunities we offer, and our doors are always open to Investors, or referrals, who want to speak with us further.
