By the time you read this newsletter your GPS Invest Pooled Fund (Pooled Fund) investment will already be seeing the benefit of the 0.75% rate increase that began on Feb 1st. This means that GPS has successfully transitioned our pipeline onto a higher borrower rate.
The management of the borrower relationships by the GPS lending team has made it possible for the rate increase to occur without damaging the loan pipeline and having borrowers seeking a better deal elsewhere.
If the consequences of a rate increase were not something that you had thought about yet, then it is an important consideration when you see other Funds rapidly increasing investor rates. For them to offer that money to investors, they are charging it out at a higher rate to borrowers. At what stage do the borrowers decide that the price is too high and go elsewhere? Or what are the quality of the deals, if the borrower is happy to pay much higher rates than what is standard in the market?
The ongoing benefit of GPS after almost 30 years in business is that this balance between our investors and borrowers is always kept front of mind to ensure the longevity of GPS through viable loans and consistent distribution rates.
We don’t make decisions as a quick reactionary response to outside factors. We make sure our decisions are strategic and effective for the success of you, our investors. Our many, many years of experience also means that we take a more conservative approach, as we see familiar industry patterns repeat themselves.
Now we are moving into a great deal of uncertainty in 2023 with inflation, end of low interest rates, institutional monies drying up, lots of home loans coming off a fixed rate and the builder/trade shortage just to name a few. Now this is not meant to scare you. These are things that we at GPS are thinking about, watching, and taking into consideration. You can take comfort in the fact that these situations are not new to us, and they are already on our radar and are being included in discussions about how we progress through the year.
As Managing Director, Richard Woodhead, states, he would sooner be wrong and deliver a lesser return than to be aggressive and lose invested funds. This approach means that you will continue to see the conservative, strategic decision making that has resulted in GPS Investment Fund Limited weathering many storms and never having an investor that has suffered a capital loss*.
If at any time you have any questions or concerns, you are always more than welcome to give us a call to chat about it.
*Past performance is not a reliable indicator of future performance.