No, the level of risk depends on the type of underlying loans and structure. Some loans, like property development or unsecured corporate debt, are less transparent and carry higher risks.

Additionally, securitised credit is structured into tranches—typically junior, mezzanine, and senior. Senior tranches generally carry the lowest risk of loss because they have the first claim to the cash flows from the underlying loans. Loans in the senior tranche typically hold credit ratings of AAA, AA, A, or BBB, while junior tranches are rated BB and B.

Australian MBS are backed by mortgages that adhere to strict lending standards, including income verification and full recourse. This gives lenders greater security by allowing them to pursue borrowers’ other assets if the collateral is insufficient to cover the outstanding loan.

The combination of transparency, regulatory oversight, and sound lending practices has resulted in no capital losses for investment-grade Australian MBS, making them a resilient and attractive asset class, particularly for institutional investors.

The Real Income Fund is part of a $2.5 billion funding platform. It achieves true diversification and monthly liquidity by investing in over 5,000 first-ranking mortgages across a broad range of borrowers and geographic locations. With an average loan size of approximately $492k and a weighted average LVR below 63%, no single mortgage represents more than 0.05% of the total portfolio, effectively minimising concentration risk.

This diversification is further supported by our unique end-to-end risk management process, robust borrower credit assessments, and comprehensive risk analysis, which have been independently validated by SQM Research with a “Superior” rating. Additionally, investors benefit from the confidence that some of the largest domestic and global banks, as well as some of the largest institutional investors in the world, have closely reviewed the Fund’s underlying books.