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10 Mar 2012 8:07 PM by stillgoin Star rating. 161 posts Send private message

 oh dear i will repeat it was not a conclusion merely a comment based onthe posts here you really should not overexcite yourself

your eyes could turn red





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10 Mar 2012 9:16 PM by ojosazul88 Star rating. 171 posts Send private message

 Not at all overexcited!!, none of the posts even remotely provide evidence that the LM fund is a "Ponzi" or "Pyramid scam". 

I just suggest you should choose your words more carefully as people who have invested money in the fund could get the wrong impression and cause unnecessary worry to them





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10 Mar 2012 11:56 PM by stillgoin Star rating. 161 posts Send private message

 seems you have problems understanding of the written word i repeat i made N O comment onthe funds just made a comment on the posts if i needed financial advice the very last plce on earth i would look is eos

as for your visciuois rumour comment you seem to livre a sheltered life and have no idea

still, fear not am BORED NOW so i wont scare you with my horrid rumours anymore LOL





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11 Mar 2012 12:42 AM by ojosazul88 Star rating. 171 posts Send private message

 

youre quick with your assumptions Stillgoin, now i live a "sheltered life",,jajajaj,,know me do you?haha,
No you didnt comment on the funds but you were quick enough to judge a few posts and throw out the words ponzi and pyramid scam, so sorry im normally used to a different kind of humour,




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12 Mar 2012 7:11 AM by LMaustralia Star rating. 1 posts Send private message

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12 Mar 2012 12:33 PM by hugh65 Star rating. 3 posts Send private message

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12 Mar 2012 12:37 PM by Ojosazul88 Star rating. 171 posts Send private message

Nice you post a definition of "Ponzi" Hugh65, but in this case i feel the post is getting side tracked as it has no relevance to the original posters questions!





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12 Mar 2012 12:51 PM by hugh65 Star rating. 3 posts Send private message

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12 Mar 2012 1:00 PM by hugh65 Star rating. 3 posts Send private message

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12 Mar 2012 1:38 PM by investormorse Star rating. 4 posts Send private message

MILLIONS OF dollars invested by New Zealanders in a huge frozen Australian mortgage fund look increasingly at risk as its loans slide into negative equity.

The $A580 million LM First Mortgage Income fund was sold in New Zealand by several financial advisers, including Money Managers, now known as MMG Advisory Partners, but in March last year it was frozen as investors rushed for the exits.

While LM's manager insists losses are "highly unlikely", the nine months to the end of January saw the average loan to value ratio soar to 83.6% from 73.6% as a result of the fund's high exposure to capitalising interest loans.

Those nine months also saw $A57.4m of its loans slip into negative equity, where the value of the loans exceeded the valuations of the property, compared to none at the end of April last year. A further $A213.6m of loans are lent on properties where the loan was between 90% and 100% of the property value.

The reason for the deterioration in the fund's security position is clear.

Despite being a fund designed to provide regular income to investors while allowing them to get their money out when they needed it, the fund had a high level of loans on which interest was capitalised – $A513m of its $A580m loans have at least some element of capitalised interest – and these swell the amount the borrower owes every month compared to the value of the security they have.

That was fine when there was a lot of money washing around in the Australian development mortgage sector, allowing borrowers to pay back their loans by simply taking out a loan from another lender.

But when the liquidity dried up, it left the fund stranded.

The fund's manager, LM Investment Management, told investors: "Lack of liquidity in the finance sector first saw a general slowdown in repayment of loans from those borrowers who were relying on refinances from other institutions to repay their loans to the scheme."

That was followed by a flight of funds as investors sought to put their money into safer places, and mounting pressure from its bank, Commonwealth Bank of Australia, which extended its line of credit to the fund to the end of June only on the proviso that it would be paid back "in priority to most investor redemptions", a mechanism banks use if they are worried about getting their money back.

The bank is currently being paid back $A5m a month, which is causing cashflow problems for the fund. If any of its big loans are suddenly repaid, CBA, owed about $A120m, has a right to 60% of the proceeds.

Such repayments are in short supply, with the number of clearly troubled loans in the fund's portfolios also dramatically increased. At the end of January, $A324.8m of its loans were overdue by 90 days or more, compared to $A135.7m at the end of April last year.

LM told the Sunday Star-Times: "LM is strongly of the belief that the economy and property markets in Australia will continue to improve, and that the forecast loan repayment line in our model will once again provide significant liquidity to the fund to enable it to resume its normal activities as a provider of first mortgage finance to the commercial and property sector within Australia.

"We believe that once the Australian banks begin lending again at normal levels to the commercial and business sector, this will assist the mortgage funds with liquidity and see normality once again return to the sector. In addition to this, as investors once again seek alternatives to bank deposits and see the strength of this industry, which has been operating for 30 years, investor inflows will once again flow into the sector."

The last financial statements appear to show that the fund does have enough to repay investors. Net asset backing was 99.7c, although what investors finally get back depends on the loans being repaid, and where they are, not the value of the security backing them.

But LM dismissed the likelihood of investor losses.

"LM has completed a detailed review of each first mortgage security in the portfolio and has, in difficult conditions over 12 months, repaid one third of its finance facility without impacting investor capital. Over the past 12 months and continually, a considerable amount of time and resources has been invested into ensuring all fund assets are protected. The assets have been put into the best possible position in order to realise their full value back into the fund. LM's focus has always been not to `firesale' assets at the expense of the unit price, and to ensure that the fund is managed in order to achieve the best outcome for all investors."

It said capital loss was "highly unlikely". "In each and every year of operation since inception 12 years ago, the unit price of the LM funds has remained at $A1. We continue to work through the various issues surrounding the funds management/mortgage trust sectors as outlined."





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12 Mar 2012 1:49 PM by Ojosazul88 Star rating. 171 posts Send private message

Investormorse, whilst the article you have cut and paste is of interest, it has no relevance as the discussion is regarding a totally different LM fund, "the managed performance fund",  which has no connection to the article you have included.





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12 Mar 2012 2:07 PM by stevebatchelor Star rating in Spain. 13 posts Send private message

stevebatchelor´s avatar

 

This message is for LM Australia. It is very much appreciated that you have taken the time and courtesy to post on this forum.
 
I am still awaiting a reply from your intermediary aesinternational from my previous post a few days ago.
 
Your advice for potential investors to contact a local LM Australia office direct is illegal. You and your fund managers are not allowed to give advice to anyone. Advice can only be given by independent financial advisers and not LM themselves on your investment funds.
 
However, having said that, if your intermediaries are all operating from unregulated countries then that advice is worthless or unreliable.
 
Would you please answer the following:-
 
Do you have licensed intermediaries in the UK regulated by the FSA? If so, how do we find out who they are?.
 
Is it true that LM currently have an 18 month delay in paying out investors?.
 
Is it true you owe investors 15 million AUD that you will not or cannot pay?.
 
Is it true that you have deleted the 1 year term from your November 2011 MPF rate sheet within the last few days, instead of issuing a new rate sheet?


 



This message was last edited by stevebatchelor on 12/03/2012.



This message was last edited by stevebatchelor on 12/03/2012.



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12 Mar 2012 2:13 PM by Ojosazul88 Star rating. 171 posts Send private message

 


 



This message was last edited by Ojosazul88 on 12/03/2012.



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12 Mar 2012 3:23 PM by mishmash Star rating. 3 posts Send private message

They have not removed the 1 year fixed but they have asked IFA's to discourange selling it at the moment as it is predominantly a property fund, liquidity squeezes do happen, and they are trying to manage themselves rather than borrowing from a bank. I also understand that on the managed performance fund it is not an 18 month wait, simply around 30 days.  They have an income protection fund that is far less susceptible to illiquidity (lack of cash flow) but offers lower rates of return. 

As an IFA, i have nothing but praise for the way LM operate and the professionalism they show day in, day out.  I cannot say that for all product providers. Recently LM dropped the rates for sterling - again, they were managing their fund, but gave us all plenty of warning that that what was they inended to do.

Effectively, if you invest in Lm (they do several types of funds) you are participating in the busines objective of that fund, and any business has risks.  But tell me what doesn't have risks - keeping you money under the matresse (fire/burglary). Putting it in the bank -  (risk of bail out or compensation scheme payout being too slow, or not high enough). It all has risks of some sort, so the answer is to spread it.  So as an IFA and an accountant myself, I think LM do a very good job and if I had some cash I would put a little into LM over 3 to 5 years.   This does not mean they won't dry up a little at some point, until they can sell properties that they have fully developed, or those properties that they have given first charge security loans over. I tell you what, I bet they could sell any properties there quicker than we can here in Spain. There is an additianal risk for superior gains compared to the banks, but the risk does not have to be silly. 

Generally, it is important we look out for each other but at the same time, we need to enlighten people by giving them statements of fact and not mere speculation. That's not saying you were, as you are entitled and right to raise your queries.    

 

 

  

 

 

 





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12 Mar 2012 4:30 PM by ojosazul88 Star rating. 171 posts Send private message

 Nice to actually see a factual post here Mishmash rather than a lot of scaremongering and ill informed information regarding this particular fund.





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12 Mar 2012 5:18 PM by investormorse Star rating. 4 posts Send private message


 



 



This message was last edited by investormorse on 12/03/2012.



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12 Mar 2012 5:29 PM by ojosazul88 Star rating. 171 posts Send private message

 What a ridiculous post Investormorse, Firstly if he is an IFA in Spain he doesnt necessarily need an "FSA number", he could be passporting through another European IFA or be regulated through a Spanish firm ie DGS/CNMV. 

 





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12 Mar 2012 5:38 PM by Sanchez1 Star rating. 853 posts Send private message

Erm, isn't Australia coming to the end of a massive property bubble?  This looks like a very high risk fund.



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12 Mar 2012 5:42 PM by investormorse Star rating. 4 posts Send private message

Mishmash Says

"I think LM do a very good job and if I had some cash I would put a little into LM over 3 to 5 years"

He may need to start giving himself some advice it sounds as if he may have liquidity problems.

What qualifications do you need to be an adviser nowadays ojosazul88
 

 

 


 



 



This message was last edited by investormorse on 12/03/2012.



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12 Mar 2012 5:52 PM by ojosazul88 Star rating. 171 posts Send private message

 typical forum small talk Investormorse. Im not here to discuss IFA qualifications so i suggest you research this by individual countries, each has its own qualification criteria!

Sanchez 1, before you make a sweeping statement like "this looks like a high risk fund", perhaps research exactly what the fund is invested in first, it doesnt sound like you have done here.





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