The Fund is regulated by the Australian Securities and Investment Commission (ASIC). ASIC regulates all financial products and financial advice providers in Australia. The Manager must obtain a financial services licence to operate a managed investment scheme within Australia. Once a licence is issued, the Manager has a set of legal obligations under the Australian Corporations Act 2001 including to:
- Ensure all financial services are provided efficiently and honestly;
- Comply with the financial services law;
- Maintain a minimum net tangible assets (cash) amount;
- Maintain competence to provide the financial services;
- Maintain membership with an external dispute resolution service provider; and
- Maintain professional indemnity insurance with a minimum $5million payable on each claim.
The Fund offers investments in selected registered first mortgage loans. Each loan is approved by ARK, and known as a ‘Syndicate-Fund’ being separate from all other Syndicate-Funds. Each investor has a direct interest in the mortgage in which they are invested, receives a regular monthly income and is provided with capital stability.
ARK offers its investors greater investment diversification opportunities within a clearly defined investment strategy. We are in a low-growth, low-yield economic environment and our focus on generating stable income represents a prudent investment approach. Mitigating downside risk and capital preservation is a critical element of our investment philosophy.
As a registered first-mortgage holder, the Fund will have first-ranking exposure to the underlying properties. Thus, in the event that borrowers default, the Fund will have first ranking exposure to the proceeds from remediation of the loan or selling the property. As such, the Fund will rank above all other creditors such as mezzanine loans, unsecured debt and equity. The lending criteria prohibits the use of subordinated debt. This is an important feature, as an additional debt burden would only increase the borrower’s total indebtedness and therefore have a higher risk of default.