Unlisted investments
An unlisted investment is not listed on a public stock market, such as the Australian Securities Exchange (the ASX). This can make it harder for investors to know what's going on with their investments because:
- you can't see the price of the unlisted investment (and whether it is going up or down) or sell it if you want to
- it can be harder to get out of the unlisted investment early, and
- unlisted investments are not subject to the ongoing supervision of a market supervisor.
ASIC has introduced a number of benchmarks and disclosure principles to help investors understand some unlisted investments and make informed investing decisions.
Find out about the investment
If you are considering an unlisted investment, remember to first check our investing tips.
More information about three types of unlisted investments
Do you need advice?
How can benchmarks/disclosure principles help?
Think about your own situation
Three types of unlisted investments
| Investment type | How it works |
| Unlisted debenture | You lend your money to a business, usually for a fixed term. You are not guaranteed a fixed rate of interest or return of your capital. The business might invest in mortgages and/or properties. Investing in debentures guide |
| Unlisted mortgage fund | You invest your money in a mortgage fund. You might not be able to withdraw from the fund at short notice. You are not guaranteed a fixed rate of interest or return of your capital. The mortgage fund invests in residential and commercial mortgages. Investing in mortgage funds guide |
| Unlisted property trust | You invest your money in a property trust. You only get your money back when the property trust ends or if you have a right to withdraw. You are not guaranteed a return on your investment or the return of your capital. The property trust invests directly in property, rather than in mortgages over property. Investing in property trusts guide |
These investments are not the same as term deposits offered by prudentially regulated financial institutions.
Do you need advice?
Take your time and think things over before you invest. Get professional advice from a licenced financial adviser if you’re not sure what to do.
If your financial adviser recommends that you invest in an unlisted investment, make sure you ask questions about this recommendation.
- How does this product fit into your overall financial plan and how will it help you achieve what you want?
- Do you understand the risks associated with this type of investment?
- Do you know exactly what the investment product will do with your money?
- Could you explain the business model of the mortgage fund to a friend or colleague?
How can benchmarks/disclosure principles help?
ASIC has introduced a number of benchmarks and disclosure principles to help investors understand some unlisted investments and make informed investing decisions. Find out more about:
Remember: Benchmarks and disclosure principles are not a guarantee that an investment will perform well. Even if the investment you are considering meets all the benchmarks or disclosure principles, you could still lose some or all of your money if things go wrong. The benchmarks and disclosure principles are simply designed to help you understand the risks and make a decision about whether to invest your money.
ASIC does not endorse specific investments.
Think about your own situation and needs
Does the investment meet your goals?
Is it important to you to protect your capital?
Have you spread your investments to manage risk?
Spreading your investments to manage risk is called ‘diversification’
What returns are you being offered?
Can you get your money back early?
Do you know how risky the investment is?
Can you accept the risks?
Do you know what you are investing in?
Is the investment related to property development?
Does the investment meet your goals?
Whenever you invest your money, it is important to have a financial goal in mind, and a strategy for meeting that goal. For example, your goal may be looking for a secure income for your retirement. Think about getting professional advice from a licensed financial adviser to help you develop a suitable investment strategy according to the level of risk you’re comfortable with. Then measure all investments against that strategy.
Is it important to you to protect your capital?
Be careful about words like ‘safe’ and ‘guaranteed’ in advertisements. They might imply that an investment is secure, when in reality it is not.
Certain financial institutions like banks, building societies or credit unions are specially regulated by the Australian Prudential Regulation Authority (APRA) to make sure that, under all reasonable circumstances, they can meet their financial promises to you. This type of regulation, called ‘prudential regulation’, protects you, for example, if you put your money in a term deposit with one of these institutions.
Most issuers of unlisted investments are not subject to prudential regulation.
Have you spread your investments to manage risk?
Most people have heard the saying, ‘Don’t put all your eggs in one basket’. When it comes to investing your money, a good way of managing risk is to spread your money between different investment types, such as cash, fixed interest, property and shares. The spread will depend on your financial goals and how much risk you’re comfortable with. These different investment types are known as ‘asset classes’.
Spreading your investments to manage risk is called ‘diversification’
Just investing in unlisted investments is not diversification.
By spreading your money both across different asset classes and between different investments within the same asset class, you reduce the risk of losing everything. By putting only a proportion of your total funds into any one type of investment, you won’t lose everything if one investment produces poor results or fails completely.
What returns are you being offered?
‘High returns means high risk’ is a familiar rule of thumb. However, as with all rules, there are exceptions to look out for.
Some investments, that appear to offer relatively modest returns, can be extremely risky. That’s why it’s important to consider more than just the returns when deciding whether to invest in something.
When comparing rates of return, make sure you compare ‘apples’ with ‘apples’ (i.e. similar investments).
Can you get your money back early?
What happens if you need to get your money out quickly? Is this an option and are there penalties for doing so?
If you need flexibility, think about investing in other financial products that allow you access to your money without heavy fees or penalties.
Do you know how risky the investment is?
Unlisted investments are generally a riskier type of investment than term deposits offered by banks, building societies and credit unions which are prudentially regulated in Australia.
Ask yourself, is the return you are being offered high enough to compensate you for the risk you are taking by putting your money in this investment?
Can you accept the risks?
The main risk with this type of investment is that the issuer might be unable to pay you interest when it is due, or pay back your money at the end of the term.
If you don’t understand the risks in this investment or you’re not comfortable taking any risks with your money, look at other financial products instead. Get professional financial advice if you’re unsure about an investment decision.
Do you know what you are investing in?
Knowing what your money will be used for can help you assess the risks and decide whether you are comfortable with this investment.
For debentures, this information should be clearly set out in the prospectus. For mortgage funds and property schemes, this information should be clearly set out in the Product Disclosure Statement (PDS). In each case, keep asking questions until you really understand.
Is the investment related to property development?
If your money will be used for property development, consider these extra risks:
- Will the property development be completed on time and on budget?
- How is the property valued?
- How will the issuer meet cash flow needs before the property development is completed and sold?
The prospectus or PDS should help you to answer these questions.
People like to think that investing in property is as ‘safe as houses’. In reality, it involves the same risk as any other investment – the risk of losing as well as gaining money.
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FIDO Website: Printed 01/06/2009
