Merx Wholesale 1 PIE Fund: Investing alongside our investors

As long time investors ourselves, some time ago we started exploring the ‘ideal’ debt fund structure – the kind of fund that we would want to be invested in now, and in the years to come for retirement. In addition to the obvious – management by experienced hands - we agreed that we’d want a debt fund that:

• Prioritised aligned interests: A debt fund where decisions are made in the interests of all parties, achieved by a fund structure where managers invest alongside investors.
• Delivers diversification within a single asset class: A debt fund that invests in a diverse range of loans to a range of unrelated borrowers and risk profiles across the business and property sectors, to reduce concentration risk within the portfolio.
• Offers flexibility: A fund that recognises that investor needs and circumstances can change, and provides the ability to enter and exit efficiently.
• Provides tax efficiency: Using the PIE structure, a fund that can deliver tax advantages and simplified tax compliance.

After surveying the market and finding that no other fund offered all four points, we decided to bring that fund structure to life ourselves: the Merx Wholesale 1 PIE Trust.

Merx has provided over $150 million in loans since we started lending to the business sector, and demand for capital continues to grow. Off the back of that demand, the Merx Wholesale 1 PIE Trust has delivered strong returns for our wholesale investors: our Target Net Return is 9 to 11% p.a., and since launching in June 2022, the Net Return to investors has been over 15%*. It’s a compelling proposition for wholesale investors to consider, and we’re now introducing it to a broader network of financial advisers to explore the potential for their clients.

An Info Pack for Investment Advisers is now available here. And in the meantime, here’s a summary of what the fund offers.

*Target returns are not guaranteed and are based on a number of assumptions; actual results may differ significantly. The Merx Wholesale 1 PIE Trust launched in June 2022; annual returns will be available from July 2023. Further, past performance is not necessarily an indicator of future performance: Investors should conduct their own due diligence on the information provided before investing.

Merx Wholesale 1 PIE Trust | The fund at a glance

Alignment of interests – and why it matters

Aligned interests is a core principle of the Merx Wholesale 1 PIE Fund. As the Trust’s management team, we personally invest alongside our investor partners.

This means that our interests as fund managers are directly aligned with those who invest with us, and fosters a true sense of partnership, transparency, and accountability. We have the same risks and potential returns as our investors, and are committed to making decisions in the interests of all parties.

Diversification: what we invest in

The Merx Wholesale 1 PIE Fund invests in secured loans to business owners and property professionals. Investors own a share of the total portfolio of loans, as opposed to being exposed to individual loans. This approach offers a lower risk, more efficient, and flexible investment vehicle for all involved.

The Merx Wholesale 1 PIE Fund maintains a diverse range of unrelated business and property industry borrowers and risk profiles. This diversification reduces concentration risk and the impact of any single underperforming loan on the overall portfolio. It also provides for liquidity in the fund – multiple loans repaying and being funded at different times provides available cash in the fund to give investors flexibility in investment withdrawal.

Flexible entry and exit

We’re committed to long term partnerships with our investors, but appreciate that circumstances can change. With that in mind, we developed the fund structure to provide for necessary flexibility:

With the Merx Wholesale 1 Pie Fund, investors can:

●      Choose to make a standing order to Withdraw reinvested returns, with no Exit Fee
●      Redeem units without incurring an Exit Fee, where six-months-notice is provided
●      Redeem units without notice at any time, with an Exit Fee of 2.5% of the Withdrawal Amount.

Tax efficiency to maximise net returns

Thanks to the PIE regime, the Merx Wholesale 1 PIE Fund is also tax-efficient for many of our investor partners. It can be particularly beneficial for investors in higher marginal tax brackets, as the tax rate on returns is capped at a maximum of 28%.

Also, tax is paid at the source within the PIE, so investors generally don’t need to include this income in their personal tax returns. This can streamline tax compliance for investors and eliminates the need to track and report investment income separately. With that said, if tax efficiency is important for an investor’s goals, we recommend that they seek advice from a tax specialist before investing.

Experienced management

The Merx Wholesale 1 PIE Trust emerges from our decade-long journey in non-bank business and property lending: the Merx management team each have 20 years commercial and professional experience in banking, finance and law.

We created the Merx Wholesale 1 PIE Fund drawing on our years of testing what works and what doesn’t from our personal investing and funding experience. Now, with the confidence that the structure can meet our investment needs and goals, we are introducing it to a broader network of investor partners.

Like to learn more?

With aligned interests, diversification, and tax efficiency, the Merx Wholesale 1 PIE Fund could be an interesting opportunity for your wholesale investor clients. Click here to learn more about the fund's strategy and the experienced team behind it.