a.s.r. mortgage fund
a.s.r. has offered mortgages in the Dutch market for more than 60 years. The total amount of mortgages provided is approximately € 5 billion. From mid-2017 onwards, investors have been able to participate in a cross-section of a.s.r.’s mortgage origination.
The ASR Mortgage Fund gives investors the opportunity to invest in Dutch residential mortgages. The objective of the ASR Mortgage Fund is to generate a stable and direct revenue stream for its participants in the long term.
Two subfunds: NHG and non-NHG
The ASR Mortgage Fund is a mutual fund that offers a choice between two subfunds, each with their own risk profile:
- A subfund with state guaranteed mortgages. This subfund only includes mortgage loans that are subject to a Dutch National Mortgage Guarantee (NHG), meaning that they come with a low risk profile.
- A subfund with no state guaranteed mortgages. This subfund only includes mortgage loans that are not subject to a Dutch National Mortgage Guarantee (NHG), meaning that they come with a higher risk profile and a higher return.
The subfund with state guaranteed mortgages has an implied rating of AAA and the subfund with no state guaranteed mortgages has an implied rating of AA.
Participating in the ASR Mortgage Fund offers an attractive return. In the longer run, the return will be higher than that on a Dutch government loan, whereas the risk profile is relatively low. The average duration of the funds is approximately ten years. Compared to the market, the default rate is exceptionally low. The expected default rate for 2020 is less than 0.01%.
Click here for the NAV & Performance: NAV & Performance
The fund promotes social and environmental characteristics as it is optimizing around energy efficient housing and tries to promote access to the market for first time home buyers. More information is available in Annex 6 of the Information Memorandum.
Well structured process
The process is well structured and liquidity is an area of focus:
- Participants can opt to have interest and (early) repayments paid out to them monthly rather than reinvesting them;
- Regular and early repayments designed for reinvestment can be used to acquire participations from existing participants
The ASR Mortgage Fund invests in Dutch residential mortgage loans that have recently been provided by ASR Levensverzekering N.V. The ASR Mortgage Fund acquires a representative cross-section of recently provided mortgages at a nominal value of 100% (executed before a civil-law notary no more than 60 days ago). The collateral for the loans is made up of Dutch residential properties. All acquired loans are subject to the strict selection criteria of the ASR Mortgage Fund. The key selection criteria are first right of mortgage, a fixed rate period of more than five years, a loan-to-value (LTV) of no more than 100%, no savings-linked mortgages and a cap on interest-only percentages. The fund does not make use of derivatives and keeps its cash reserves as low as possible. It does not have a benchmark, although the results are compared to developments in the swap curve.
The costs of the fund are fixed; participants pay an all-in fee.
June 2020, the size of the fund is more than € 5 billion; we expect the AUM to rise above € 6 billion before the end of 2020.