US fixed income giant PIMCO is to bring back a fixed income listed investment trust offer it shelved early last year following Australia’s treasurer Josh Frydenberg launching an investigation into stamping fees.
According to the Australian Financial Review, PIMCO says it will launch the offer in March 2022 and will invest in both public and private investments.
The review announced by Frydenberg ended up with passed legislation closing a loophole that allowed financial advisers or stockbrokers to receive lucrative commissions – “stamping fees” – for selling poorly performing listed investment funds to retail investors. The fees were long considered conflicted remuneration for advisers and came to a head amid allegations that financial planners and brokers were “churning” clients in listed investment trusts.
A Listed Investment Company (LIC) or Listed Investment Trust (LIT) is an ASX-listed company or trust set up to invest in a portfolio of securities managed by a fund manager and its shares are traded on the Australian Securities Exchange.
Also read: Two Hybrid Funds Side by Side – DHOF and HBRD
Retail investors have been investing in LICs and LITs with exposure to equities, hedge funds, private equity, direct loans and leveraged junk bonds. Low interest rates have helped drive a riskier “reach for yield” approach among many investors.
In September, Metrics Credit Partners completed a successful $190+ million institutional placement undertaken by its ASX-listed MCP Master Income Trust.
The AFR reported sources saying that the PIMCO raising will be the first in front of investors, with other offerings lining up once the market reopens.
