Current Unit Price: (20 min. delayed price) ASX:MXT $2.03 0.00%
NAV as at COB: 21.04.21 $2.0057
Current Unit Price: (20 min. delayed price) ASX:MOT $2.00 0.50%
NAV as at COB: 21.04.21 $2.0352

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Listed Investment Trusts (LITs) – providing the structure for income

As the number of investors seeking income in today’s record low interest rate world rises, an increasing number are considering Listed Investment Trusts (LITs).

These closed-ended trusts (similar to listed investment companies or LICs) enable investors to invest in assets that require longer investment time horizons – such as corporate loans and infrastructure and property developments.

LITs accounted for around 20% of the $52.8 billion LIC/LIT sector at the end of December 2020, according to the Listed Investment Companies and Trusts Association (LICAT).

The LIC and LIT industry in Australia is entering its 98th year of operation. There are few other investment structures that have been able to support investors in building wealth over such a long period.

Ian Irvine, CEO of LICAT said: “The significant longevity of the sector reflects the strong corporate governance framework developed by the sector and the ASX, the transparency and efficiency of open and competitive capital markets and the inherent benefit of the closed-end fund structure which encourages managers and investors to both invest and focus on the long, rather than the short-term.

Trust – worthy

LITs as trusts, are not subject to company tax, and they pass income straight through to investors on an untaxed basis.

LITs are also closed-ended funds. This means that after raising capital through a unit issue, their capital remains fixed. Unlike open-ended ETFs or managed funds, LITs are therefore not forced to sell assets to meet withdrawal requests.

Mr Irvine noted: “While LITs have some of the typical characteristics of a trust structure, their secure capital base can be an additional benefit to investors. Because they do not have to sell assets to meet investor withdrawals, LITs can strategically invest in longer term assets, while still providing their own unitholders with the ability to buy and sell on market as needed. In many cases, this may give retail investors the opportunity, and hopefully the added return or diversity benefit of investing in asset classes that are usually only accessible by wholesale investors.”

“Having long term investment vehicles also supports the Australian economy. Many vital investment projects such as renewable energy and infrastructure require patient, long term investment. The closed-ended structure of LICs and LITs means they are one of the few structures suited to these long-term investment commitments.”

Andrew Lockhart, Managing Partner at Metrics Credit Partners, which manage two LITs (ASX: MXT and ASX: MOT) said, “as a non-bank lender offering Australian corporate borrowers access to an important source of non-bank finance and unique borrowing solutions, the LIT structure with its closed end secure capital base is ideal for the way we operate.

“Our LITs provide retail investors with daily access to private debt markets in an easy tradeable way via the ASX. We are subject to ASX listing rules which provides investors with comfort as to the high corporate governance standards by which we operate and coupled with our experienced investment team enables us to deliver a regular monthly income stream”, he said.

“Importantly, we have a clear focus on risk management and have a demonstrated track record of delivering for investors, we have not experienced any impairments or arrears across our portfolio’, Mr Lockhart concluded.

Mr Irvine added that closed-end funds provided unique advantages to investors, the broader economy and the financial markets system.

LICs and LITs have been assisting investors in growing their wealth for nearly 100 years. Today, over 700,000 Australians invest in the LIC and LIT sector. The efficiency and stability of their closed-end structure coupled with the corporate governance disciplines of ASX listing have proven to be far more durable than many other investment structures.

Adviser Voice, 24 February 2021
Current Unit Price: (20 min. delayed price) ASX:MXT $2.03 0.00%
NAV as at COB: 21.04.21 $2.0057
Current Unit Price: (20 min. delayed price) ASX:MOT $2.00 0.50%
NAV as at COB: 21.04.21 $2.0352

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All website content in respect of the MCP Master Income Trust ARSN 620 465 090 (the Trust) is issued by The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL 235 150 (Perpetual) as responsible entity of the Trust and is prepared by Metrics Credit Partners Pty Ltd ABN 27 150 646 996 AFSL 416 146 (Metrics) as the investment manager of the Trust.

The information provided in this website is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of the Trust, you should consider the current product disclosure statement (PDS) of the Trust and the Trust’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au/, and assess whether the Trust is appropriate given your objectives, financial situation or needs. If you require advice that takes into account your personal circumstances, you should consult a licensed or authorised financial adviser.

Neither Perpetual nor Metrics guarantees repayment of capital or any particular rate of return from the Trust. Neither Perpetual nor Metrics gives any representation or warranty as to the currency, reliability, completeness or accuracy of the information contained in this website. All opinions and estimates included in this website constitute judgments of Metrics as at the date of website creation and are subject to change without notice. Past performance is not a reliable indicator of future performance.

Cororate Governance
Personal Trading in Non-Perpetual Securities | RE Services Personal Trading in Non-Perpetual Securities | Unitholders Communications Policy | Continuous Disclosure Policy

The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned May/2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

Disclaimer and disclosure

All website content in respect of the MCP Income Opportunities Trust ARSN 631 320 628 (the Trust) is issued by The Trust Company (RE Services) Limited ABN 45 003 278 831 AFSL 235 150 (Perpetual) as responsible entity of the Trust and is prepared by Metrics Credit Partners Pty Ltd ABN 27 150 646 996 AFSL 416 146 (Metrics) as the investment manager of the Trust.

The information provided in this website is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of the Trust, you should consider the current product disclosure statement (PDS) of the Trust, and the Trust’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au, and assess whether the Trust is appropriate given your objectives, financial situation or needs. If you require advice that takes into account your personal circumstances, you should consult a licensed or authorised financial adviser.

Neither Perpetual nor Metrics guarantees repayment of capital or any particular rate of return from the Trust. Neither Perpetual nor Metrics gives any representation or warranty as to the currency, reliability, completeness or accuracy of the information contained in this website. All opinions and estimates included in this website constitute judgments of Metrics as at the date of website creation and are subject to change without notice. Past performance is not a reliable indicator of future performance.

Cororate Governance
Personal Trading in Non-Perpetual Securities | RE Services Personal Trading in Non-Perpetual Securities | Unitholders Communications Policy | Continuous Disclosure Policy

The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned May/2019) referred to in this document is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at http://www.zenithpartners.com.au/RegulatoryGuidelines

Disclaimer and disclosure

All website content in respect of the Metrics Direct Income Fund ARSN 641 620 331 (the Fund) is issued by Evolution Trustees Limited ACN 611 839 519 AFSL 486 217 (Evolution) as responsible entity of the Fund. Metrics Credit Partners Pty Ltd ABN 27 150 646 996 AFSL 416 146 (Metrics) is the investment manager of the Fund.

The information provided in this website is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs. Before making an investment decision in respect of the Fund, you should consider the current product disclosure statement (PDS) of the Fund which is available at www.metrics.com.au, and assess whether the Fund is appropriate given your objectives, financial situation or needs. If you require advice that takes into account your personal circumstances, you should consult a licensed or authorised financial adviser.

Neither Evolution nor Metrics guarantees repayment of capital or any particular rate of return from the Fund. Neither Evolution nor Metrics gives any representation or warranty as to the currency, reliability, completeness or accuracy of the information contained in this website. All opinions and estimates included in this website constitute judgments of Metrics as at the date of website creation and are subject to change without notice. Past performance is not a reliable indicator of future performance.

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