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Forager's successful move on LIT structure

13 December 2016 By Staff Writer


Forager Funds Management's flagship Australian Shares Fund is expected to pass an important milestone this week, converting from an unlisted, open-ended structure to a closed-ended listed investment trust (LIT).

The company announced this week it anticipated to commence trading on the Australian Securities Exchange (ASX) this Friday after unit-holders recently voted to convert the seven-year-old fund to the closed-ended LIT.

Commenting on the move, Forager chief investment officer,  Steve Johnson said moving to a closed end, listed vehicle for Forager is about moving to a structure that gives the best chance of generating returns and protecting investor capital over the long-term.

Like other closed ended structures, the best known being the listed investment company (LIC), the number of units on issue in the LIT is fixed, meaning the fund will not be required to set aside liquidity to meet any potential redemption requests.  

"By removing liquidity risk through converting to a close-ended trust, we will be able to fully invest the fund's assets when we see attractive opportunities, and remain invested, or invest more in times of market distress," Johnson said.

He said the somewhat unique LIT vehicle was selected due to its suitability for the fund's style of investing, which was long-term, capital gain focussed where returns can be lumpy from one year to the next.  

"We asked our existing unit-holders to accept the potential illiquidity, noise and volatility associated with an ASX-listed entity in return for a listed investment trust structure best suited to maximising the long-term returns we're known for, which they did, with 96 per cent of votes supporting the listing," Johnson said.

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