Perennial will add to the resurgence of the Australian listed investment company (LIC) sector with the float of its Wealth Defender fund on the ASX next month.
The Australian fund manager confirmed the listing last week after raising the A$50 million minimum in pre-float capital-raising – some of which came from New Zealand investors, according to Clatyon Coplestone, head of Heathcote Investment Partners.
Coplestone, who represents Perennial in NZ, said some brokers and financial advisers here have also expressed interested in the product – a listed “clone” of the open-ended Wealth Defender fund.
“Whether investors choose the open-ended or the LIC option depends on their preferences,” Coplestone said. “Some like the immediateness of the LIC while others prefer the ‘set-and-forget’ open-ended fund.”
He said New Zealand investors would have to consider the tax consequences of the Wealth Defender listed vehicle, which, like the unlisted fund it mirrors, is an Australian unit trust.
Wealth Defender is a value-oriented Australian equities fund with an option overlay designed to defray market declines of between 5-20 per cent.
“It doesn’t protect against ‘noise’ – which I define as market drawdowns of up to 5 per cent,” Coplestone said.
He said a few New Zealand institutional investors have “been looking” at the unlisted version of the fund as well.
“I thought instos would’ve been interested in the listed version but the feedback is they prefer the unlisted, mandate-style approach,” Coplestone said.
The scheduled Perennial fund IPO follows closely the listing of a Magellan global equities product, which began trading last month. Perpetual also listed a fund product last December.
According to the latest market statistics, 65 LICs are listed on the ASX – an increase of 10 over the last three years.
The increase in LICs, however, has been overshadowed by the number of exchanged traded products (ETPs – most of which are classified as exchange-traded funds, or ETFs) on the ASX, which now stand at 110.
While LICs are closed-ended products and tend to be actively-managed, ETPs are open-ended and usually track market indices.
The ASX also facilitates sales of unlisted managed funds via its relatively new mFunds platform, which boasts about 90 products to date.
Both the launch of mFunds and the increasing array of ETFs and LICs are broadly targeted at capturing the wallets of Australia’s self-managed superannuation fund (SMSF) investors, who collectively account for about A$560 billion – or over a third of the country’s total superannuation assets.