Pendfund Income Fund I invests in a low-risk asset class maintaining a majority of investment-grade mortgage loans in its portfolio. This grade of loan are loans most likely to be funded by Schedule A institutional lenders such as banks and insurance companies. This asset class is one of the lowest risk classes available in fixed-income investment due to hard-asset security.
INTEREST RATE RISK
In a sector of the portfolio, the Fund focuses on shorter-term loans which require fast execution and flexible terms. Borrowers use these loans for shorter than average terms for capital improvements, property redevelopment or as bridge financing. Larger financial institutions typically cannot provide the structure borrowers require, nor the rapid deployment of capital. This mitigates risk with the potential of the re-investment of capital in higher rate loans should interest rates rise.
The Trustee of the Fund is registered with and regulated by the British Columbia and other Securities Commissions within the Canadian Securities Agency which regulate compliance in capital raising, reporting and marketing activities of securities dealers. Under legislation, dealers are required to follow strict code of conduct and proper client processes to ensure good faith dealing and fair service. Annual audit procedure prescribed by securities legislation adds to transparency.
The Manager is registered with and regulated by the Financial Institutions Commission of British Columbia and is subject to strict requirements set out by the Commission. These include requirements for disclosure, record-keeping, conflict management and marketing.
Pendfund Income Fund I Units are offered privately on a brokered and non-brokered basis. Involvement of brokers often involves diligence by qualified analysts and legal counsel. This due diligence process includes a review of the company’s operations, financials, business model and individual assets.
INSURANCE RISK AND BONDING
The Issuer of the Trust is bonded with a Financial Institutions Bond, a bond required by securities legislation for all Canadian financial institutions which covers losses against fidelity, losses of money or securities, forgery, employee malfeasance, counterfeit, theft and on premises risks, among other losses.
The mandate of Pendfund Income Fund I is to provide Investors fixed-income, a functional return and secured capital.
There is a steady and solid demand for these loans and Pendfund Income Fund I meets this demand.