Squirrel bites into residential mortgage investments

John Bolton.

Squirrel chief executive John Bolton says he's excited to launch the Squirrel Monthly Income Fund that gives retail investors access to a diversified portfolio of loans for homeowners, backed by the country’s favourite asset class - property.

The new portfolio investment entity (PIE) fund will be issued and managed by Implemented Investment Solutions with expected before tax returns from 4.75% per annum (OCR + 4.00%) paid monthly.

Squirrel has also partnered with retail investment platform InvestNow as the primary way for investors to access the fund.

New Zealand's banks do not give retail investors the opportunity to invest directly into the home loan market and Bolton says the brand new fund offers investors the benefits of regular income, all housed within a tax-efficient PIE structure.

“Residential property remains the most important source of wealth for many Kiwis,” he says.

“Commercial real estate funds have proved consistently popular in New Zealand as members appreciate both the diversification and regular income.

"The Squirrel fund simply expands the opportunity into what is undoubtedly a larger and more familiar side of the property market for most Kiwis - it’s the investment next door.”

Squirrel chief operating officer David Tyrer says one of the most interesting things in the New Zealand financial market is just how big the home loan debt pool is relative to any other market, and how little access there is for investors.

"At over $320 billion, it dwarfs individually the capitalisation of the NZX, Government debt, corporate debt, agri-debt, and Kiwisaver.

"If we look offshore, residential mortgage-backed securities are commonplace, and some of the deepest investment pools in the world," Tyrer says.

Bolton says new fund packages up Squirrel’s residential real estate lending expertise into a convenient, tax-effective investment vehicle where investors derive returns from a diverse portfolio of high-quality loans predominantly secured against residential property.

“As well as the expected regular monthly income, investors in the Squirrel fund will take comfort from knowing their risks will be managed by having exposure to a diverse range of underlying loans, and a claim on property should borrowers default,” Bolton says.

“Squirrel has built up a reputation as a trustworthy brand with a clear focus on the needs of New Zealand investors – and we’re excited to be democratising investing in home loans for all Kiwis.”