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Monthly income LIT resonates with SMSFs

Metric Credit Partners (MCP) has experienced immense support from investors, including SMSFs, with its Master Income Trust initial public offering, which closed yesterday, raising more than $500 million.

The listed investment trust (LIT) was created with SMSF investors in mind as it distributes monthly dividends and has low capital volatility.

It provides direct exposure to Australia’s corporate loan market, which historically has been dominated by banks and therefore difficult for non-bank investors to access.

“SMSFs well and truly get the proposition – I don’t think we would’ve raised in excess of $500 million if they didn’t really get it,” MCP managing partner Andrew Lockhart told selfmanagedsuper.

“The interest level has been really strong and when we’ve met with financial planning groups and investors directly, as well as the research houses, they’ve asked great questions about the offering, so it’s been a really good process in ensuring that it is well understood.

“Also part of that process involved the investment we made in providing access to good-quality research and making it available.

“So it’s a great outcome and the ability for SMSFs to have their capital pooled with our large wholesale investors means that our investors are able to get access to a wholesale product at wholesale prices, and I don’t think there’s another offer of similar, comparable value.”

Lockhart revealed the LIT’s monthly income was appealing to SMSFs.

“We’ve found a lot of them are looking for alternatives for a stable part of their asset allocation,” he said.

“What we’re providing them with is access to a risk profile with assets where the underlying assets are well diversified across 50 corporate loans, providing that stability of capital, with the ability to pay an income on a monthly basis – that’s been very well received.”

The Master Income Trust is scheduled to list on the Australian Securities Exchange on 9 October.

MinterEllison’s “Directions in Capital Markets Report 2017”, released earlier this month, found demand from financial advisers, investors and SMSFs for listed investment vehicles, which offered a wide range of asset classes and investment strategies in order to build a diversified portfolio, had sparked a surge in financial listings.

In the 2017 financial year, there were 12 listed investment offerings added, bringing the number of such vehicles to 102.

The sector capitalisation rose by 12.3 per cent to $33.1 billion during the period, the report said.

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