At ResiFund, we make money in three ways.
(i) ACQUISITION FEE
We earn an acquisition fee when we buy assets for the fund. This equates to two per cent of the cost of acquiring or constructing a property and covers the sourcing, negotiation and due diligence we do to find and secure the best property for the Fund, as well as the management of the acquisition process through to settlement and completion.
(ii) ASSET MANAGEMENT FEE
Our ongoing asset management fee is just 0.9 per cent of the assets within the fund.
The asset management fee covers the management of the whole fund, including all of the in-house resources that we have working behind the scenes on the Fund’s investment strategy, financial analysis and reporting, research and development of new housing products to maximise rental income. At all times we manage the assets in the fund in the way that’s best for investors.
(iii) PERFORMANCE FEE
If we are able to exceed the benchmark return on a three-yearly rolling basis we will receive a performance fee.
The benchmark return is linked to the Australian residential three-bedroom total return index, and we need to beat that index by two per cent.
This means if the market achieves 20 per cent per annum (including capital growth and gross rent), we need to get 22 per cent per annum (including capital growth and net rent) before our performance fee kicks in. If the market gets six per cent total return, we need to get eight per cent, and so-on.
If we are able to beat the index by more than two per cent per annum, then we will receive a performance fee equal to 20 per cent of the returns exceeding that benchmark.
For example, if the index total return is eight per cent and we achieve a 15 per cent total return, then our performance fee would be calculated as:
(Actual return – benchmark return) x 20%; where benchmark return = 0.08 + 0.02 = 0.10
Therefore, the performance fee would be: (0.15 – 0.10) x 0.20 = 0.05 x 0.20 = 0.01 or 1%
So, if we beat the market by five per cent, we would be entitled to a performance fee equal to one per cent of the assets under management.
While this gives us quite a strong incentive to outperform the market, it ensures that the majority of the super-profits end up in investors’ pockets.
One of the reasons for this is that we also have skin in the game ourselves, and that means that we’re investing in right alongside you.
All of these fees are set out in our product disclosure statement, or PDS, which you can download from our website.