Risk Summary
All investments, including bank savings, include risk. Some investments carry more risk than others, and Bingo Capital Fund manages and mitigates its risk by:
- Ensure that all loans are secured by mortgages over real estate assets
- Loans are secured by LVRs, generally between 60% and 70%.
- Our loans are often short-term in nature, protecting possible risk from interest rate swings and providing liquidity to the fund.
Our Information Memorandum gives a full description of the risks involved, and we've included an excerpt from it below to help you better understand the unique risks associated with investing in our Fund.
Default by borrower
- If a borrower is unable to pay the loan's interest or fails to repay it on time.
- Bingo Capital Fund assures that all loans are backed by first and second-rank mortgages on valuable properties. This security can be converted into cash if necessary.
Overstated valuation
- This risk may develop if the proceeds from the sale of a property are inadequate to fully repay the loan.
- Bingo Capital Fund validates the assessment by a competent valuer before making a new loan. We maintain modest Loan to Value Ratios (LVRs).
Litigation and documentation risk
- We are at danger when security properties are sold to enforce the debt. Proceedings can take time and money, which may affect loan repayment. This risk is larger with second-ranked mortgages.
- Bingo Capital Fund's wholesale lender mitigates this risk by adhering to a conservative LVR and always having industry standard legal paperwork kept by an external custodian.
Inadequate Insurance
- We confront a risk when the security property is damaged or destroyed and there is no or insufficient insurance coverage.
- Bingo Capital Fund exclusively invests in commercial loans made by wholesale lenders, who have systems in place to ensure that all properties are fully insured at all times during the loan period.
Decline in Property Market
- Downward swings in the property market may have an impact on loan security and our ability to completely recover the loan, interest, and fees. This, in turn, may affect the Trust's returns.
- Bingo Capital Fund controls and monitors this risk by adhering rigorously to its lending and LVR requirements.
- We also reduce risk by investing in loans with short maturities (often 6-12 months).
Please review our accompanying Information Memorandum and Supplementary Terms, which fully describe all of the risks connected with our Investment Trust.
If you're still unsure, please phone us; we'd be pleased to address your concerns. If you are still unsure, we recommend that you get personal guidance from a licenced, competent financial adviser.
