Ethical LIC IPO exceeds $38.5 million

The initial public offering (IPO) for ethically screened listed investment company (LIC), the Morphic Ethical Equities Fund, has exceeded its minimum target of $38.5 million, with just over a week of the offer period still to go.

“Appetite has been strong – investors are excited to have a way to get better risk-adjusted returns, as well as the comfort of matching their investments with their personal beliefs through a portfolio that excludes companies that are bad for the environment and society,” Morphic Asset Management managing director Jack Lowenstein said.

As the first LIC offering investors an ethically screened equity portfolio in more than a decade, the Morphic Ethical Equities Fund has backing from Westpac subsidiary Ascalon, which is investing $5 million in the IPO.

In addition, the IPO has received a $1.1 million investment from Wilson Asset Management chairman Geoff Wilson and $550,000 from Lowenstein.

The LIC will mirror the strategy of the Morphic Global Opportunities Fund, which has earned investors compound returns of 17.5 per cent a year since its inception in August 2012, with significantly lower volatility than most of its peers.

The offer closes on 19 April.

Last month, Lowenstein told selfmanagedsuper that the LIC was expected to align well with SMSF investors’ growing desire for environmental, social and corporate governance, and responsible investing.

“There’s been a lot of interest and from SMSFs there are some who want an ethical screen, so it was a question of whether an LIC is the right vehicle and I believe it is because the LIC structure gives great alignment between investors and managers,” Lowenstein said at the time.

“Unlike unit trust managers, the only way we can grow our business is through generating great absolute performance.

“Also, because we don’t have to worry about redemption risk, we can take a longer term view. This generally benefits investors.”

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