FAQs
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Q. What will you do with my money?
A. Your money is put into the Classic Investment Offer fund (Investors Exchange Investment Fund ARSN 120 933 093) which is professionally managed by Investors Exchange Ltd (IEL) ACN 116 489 420 (the Responsible Entity), which holds an Australian Financial Services License (#299024). The fund you are investing in is registered with ASIC as a managed investment scheme and the Fund's Constitution and Compliance Plan have met very stringent regulatory requirements in order to be registered.
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Q. Who does the Fund lend my money to?
A. The Fund lends investors' monies to Freedom Financial Services Pty Ltd [ACN 109 610 442] (Freedom) for the sole purpose of Freedom on-lending to buyers of Classic Holiday Club memberships (Timeshare Loans). Funds are not used for any other purpose. Freedom is part of Classic Holidays. Prior to Freedom receiving any monies from the Fund, Freedom must meet strict loan approval terms and conditions ensuring the receivable assets of Freedom (the Fund security) are in place and it is IEL's role to manage this process.
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Q. When are distributions paid?
A. Interest is payable monthly in arrears within 5 days of the last day of the month.
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Q. What management fees does IEL charge?
A. None. There are no entry or exit fees, under the terms of its loan obligations to IEL, Freedom has agreed to pay IEL a capital raising fee and to meet costs associated with running the Fund.
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Q. Can the rate of interest I receive vary?
A. You receive a fixed interest rate of 4% pa (3 year term), paid monthly in arrears. Unlike some other funds where you have no real knowledge or control of how or where your money is being invested, the Classic Investment Offer is investing in only one product which lends at a fixed rate of 14.8% so your returns are not subject to any market volatility. Of course, this assumes that Freedom meets its interest payment obligations.
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Q. What are the risks of my investment?
A. There are a number of investment risks which are detailed in Parts 1 and 2* of the Product Disclosure Statement which specifically relate to this type of investment. You should make yourself familiar with those risks prior to making any investment. [* Note: PDS Part 2 relates to the current offer]
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Q. Is my capital secure?
A. IEL takes a first ranking registered fixed and floating charge over Freedom's entire assets and undertakings. Freedom is required to maintain a loan to value ratio (LVR) of 90% of its receivables (loan book). Put simply, for every $250,000 drawn from the fund Freedom must maintain a minimum of $275,000 in complying loans which are not in default for the duration of every $250,000 IEL loans to Freedom. Freedom's loan book is independently audited every 3 months. If a loan is ever in default, Freedom is required to replace it with another loan in good standing to maintain the minimum 90% loan to value ratio. To put that in perspective - since 2005 Classic Holidays has successfully loaned millions of dollars to thousands of happy customers to help them to purchase their holiday lifestyle. In order to further reduce risk associated with lending prospective Timeshare Purchasers are offered Credit Protection Insurance which covers their repayment in the event of accident, sickness, involuntary unemployment and provides additional life cover for the outstanding loan in the event of death. The take up currently exceeds 65%.
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Q. How does Freedom make money?
A. The Fund charges Freedom per annum. Freedom lends at a rate of around 14.8% per annum to the purchasers of timeshare [average loan $10,000] who make monthly principal and interest repayments to Freedom, typically over a period of between 5 and 7 years.
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Q. What investment advice can you give me?
A. We cannot give you personal advice about this investment. Our advice can only be general advice which has been prepared without taking account of your objectives, financial situation or needs and you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. We will provide you with a Product Disclosure Statement relating to the product and you should consider the statement before making any decision about whether to acquire the product.