Australian fund manager LM Investment Management Ltd (LM) has launched the LM Australian Income Fund – Currency Protected Lux. The fund, a Luxembourg-domiciled SICAV-SIF, offers institutional investors, qualified investors and IFAs exposure to Australia’s well-performing property market. The fund offers hedged share classes in Euros, US Dollars and Sterling, as well as non-hedged AUD investments.
It is LM’s first Luxembourg domiciled fund, and will further expand LM’s global distribution (currently some 60 countries) throughout the UK and Europe, specifically in countries only able to invest via a SICAV-SIF structure.
The new fund benefits from LM’s 13 year track record in providing Australian income solutions for global investment, and functions as a feeder into the LM Australian Income Fund – Currency Protected (Master Fund), which is underpinned by the strength, diversity and resilience of Australia’s economy and property markets. The fund invests in a diversified pool of Australian registered first mortgages, including commercial, residential, industrial and retail property mortgages, vacant land and cash. LM diversifies the underlying mortgage portfolio by selecting securities spread across different property sectors and geographic locations within Australia. The target EUR return is 4.75% per annum with very low volatility.
Since inception, the Master Fund has provided consistent outperformance against the major currency cash rates, specifically, GBP by 3.00% to 4.75%, and EUR by 2.00% to 3.75%. The LM Australian Income Fund – Currency Protected Lux will mirror this outperformance against the reference currency.
The Australian property sector, the underlying asset of the fund, benefits from size and diversity, and is not correlated to property markets anywhere else in the world. LM expects Australian property to continue to perform well, benefiting from population growth, almost full employment affordable interest rates, and a strong and well diversified economy.
LM founder and CEO, Peter Drake (pictured) says: “Many European investors are looking further afield for growth and returns, and Australia is the logical choice. The Australian property market is one of the world’s best performers.
"Australia’s residential, commercial, office property and retail property markets continue to be driven by demand with property values holding or rebounding, which presents continued, strong opportunity for the fund.
“Utilising the Luxembourg structure for our established income funds will allow European advisers and institutions greater ease of access to the quality Australian investment assets we manage. Luxembourg has a very well developed fund management industry, so all the proven legislation, legal, custodial, audit and administrative infrastructure required to operate soundly exists. It has a very similar financial landscape to that in Australia, which provides further comfort and confidence for LM and our prospective clients.”