Risks

Return Risk

This is the risk that the entities the Fund invests in may not be able to provide an adequate return and hence the Fund may not be able to it's target return of 12.8 percent per annum distribution return to its investors. An investment in the Fund is not the same as depositing money in an account with a bank and an investment in the Fund is riskier than depositing money in a transactional bank account or term deposit with a bank. An investment in the Fund is also not covered by the depositor protections available to depositors that make a deposit with an Australian ADI. Returns are not guaranteed.

Default Risk

There is a risk that either the entities in which the Fund invests, for example, MoneySpot Finance, or the borrowers to whom entities such as MoneySpot Finance lends may not be able to meet their financial obligations to pay interest and/or principal in respect of the Fund’s investments or loans when they fall due, which could impact upon the Fund’s performance and the value of Units.

Regulatory Risk

The entities that the Fund will invest in issue loans that are usually unsecured, smaller, of a shorter duration and attract a higher fee or interest rate than standard secured loans usually offered by a bank. As a result, they have attracted attention from government regulators and consumer advocates who have argued for tighter regulation and a reduced fee structure. While the government has now resolved to introduce limits on Small Amount Credit Contracts (SACCs), there is a risk there will be further regulation to limit the amount a consumer can be charged which could affect the Fund meeting its investment return objective.

Diversification Risk

The Fund will invest the first $100m it raises in unsecured notes issued by MoneySpot Finance. MoneySpot Finance is a related entity of the RE and participates in the small and medium loans segment of the credit market. It will use the funds it receives from the Fund to further participate in the small and medium loans segment of the market. While this segment can be especially profitable with a lower overall default risk due to the spread of loans over thousands of borrowers, all the loans are being made by one entity, MoneySpot Finance. The Fund will therefore depend on the performance of MoneySpot Finance to be able to lend and collect interest and principal repayments from its borrowers, and this risk is not borne across different small and medium amount lenders for the first $100 million of investment monies raised.

Loan Origination Risk

A failure by MoneySpot Finance to deploy funds to borrowers may result in an application to invest in the Fund being rejected by the RE, in whole or in part. If an application is refused, then the Application Money will be refunded. No interest will be paid on the Application Money for the period it is in the applications bank account.

Liquidity Risk

The Fund will be illiquid.  This means you will only be able to withdraw from the Fund in response to a withdrawal offer made by the RE, currently scheduled every six months.

The RE can only make withdrawal offers if there are sufficient assets available to it to satisfy any withdrawal requests made in response to the offer.  The availability of assets is primarily affected by the returns the Fund receives from its investments, in particular, the payment of coupon amounts by MoneySpot Finance and repayment of unsecured notes on maturity.You should be aware that whilst you may transfer your Units in the Fund to a buyer, there is no secondary market for Units