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LMIs lead IPO growth

With 24 new funds coming to market raising in excess of $2 billion in 2004, the number of Listed Managed Investments (LMIs) for 2005 already looks set to significantly increase.

In this article we look at the growth of the LMI sector and explore why LMIs are increasingly becoming a popular tool for investors to accumulate and preserve wealth.

Capital raisings for this year have almost equalled last years total and 5 new listings are expected in April alone.

Investment bank Babcock & Brown has been a major player in this area, having raised $1.6 billion via their private equity fund, Japanese property trust and hedge fund (jointly with Everest Capital) already this year.

The bank also is planning to re-brand Prime Infrastructure so that its suite of funds has the Babcock & Brown brand attached to them.

Macquarie also listed its new Macquarie Capital Alliance Group – its second private equity fund this year. This comes in addition to the $20 billion worth of property and infrastructure vehicles already listed on ASX.

The pipeline continues to looks strong, with the first infrastructure fund of fund, the Api Fund and Fat Prophets Australia Fund, listing in late April.

The LMI sector has grown to more than $128 billion to the end of March 2005 – up 26.7 per cent from last year. Most of this growth has come from Listed Investment Companies (LICs), Listed Property Trusts (LPTs) and Infrastructure Funds.  

Like managed funds, listed managed investments have a professional fund manager who makes all the investment decisions on behalf of their investors.

LMIs are an increasingly becoming a popular tool for investors to accumulate and preserve wealth. They can also be effective income producing investments.

Investors can access portfolios of Australian shares, international shares, real estate, fixed interest, infrastructure, private equity, and alternative investments.

While the variety of asset classes is wide, the management styles range from very conservative to aggressive. There is a Managed Investment tailored to virtually every set of investment goals, timeframes and risk tolerance.

The range of investments available for investors to choose from includes LICs, LPTs, Infrastructure Funds, Exchange Traded Funds, Pooled Development Funds and Absolute Return Funds.

More recently infrastructure and private equity have emerged as a major part of the LMI sector, in addition to shares and property.

The majority of the 120 LMIs have a low cost feature, making them attractive for those looking to create a diversified investment portfolio.  Management fees of LMIs typically range between 0.15 to 1.00 per cent plus brokerage compared to unlisted managed funds which range between 2-3 per cent per annum.

© All rights reserved 2005. This material is educational and it is not intended to constitute financial advice.

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