Term deposits 'could offer a structure for mortgage funds'

Friday 01 October 2010

Article by Mozo

Term deposits present a restructuring option for the more unstable area of mortgage funds, it has been suggested.

A report in the Sydney Morning Herald notes that this month marks two years since mortgage fund managers were caught by "a wave of redemption demands" after the treasurer introduced the deposit guarantee in October 2008.

It also observed that since then, the various liquidity problems affecting mortgage funds have been compounded by a downturn in the commercial property market.

Commenting on the issue, the communications manager for Morningstar Australasia, Phillip Gray, told the newspaper: ''Our preference would be to see mortgage funds structured more like term deposits, so there is a better match between assets and liabilities."

The report concluded that, because of various problematic issues with mortgage funds, their returns have been "well below" term deposit rates over the past year.

Aussies looking to secure the best interest rates for their funds should look to compare term deposits and switch provider. According to the Merrill Lynch Global Wealth Management and Capgemini fifth Annual Asia-Pacific Wealth report, released last month, the number of Australians classed as high-net-worth individuals grew 34 per cent to 173,600 last year.

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