The manager of Howard Mortgage Fund – one of the country’s oldest mortgage trusts - has begun the process of returning capital to unit-holders, providing further evidence of the industry’s decline following the GFC.
Fidante Partners wrote to unit-holders in November last year, advising them that it had ceased to offer investment in the fund to new unit-holders and that existing unit-holders would no longer have the option of reinvesting their monthly income distributions.
The manager made an initial repayment last week of 10 cents per unit – a 10% return of capital - and plans to repay capital of five cents per unit each month from February.
Mortgage trusts suffered heavily during the GFC, prior to which the industry represented a A$20bn pool of capital for mortgage finance. Now, only a handful of fund managers remain.
Total funds under management fell 24% in 2010 and a further 19% in 2011.
Other funds that are being wound up include Balmain Mortgage, Colonial First State Income and Perpetual Mortgage.