Australia’s corporate regulator has temporarily stopped retail distribution of Class A units in the Ares Global Credit Income Fund, questioning whether the investors identified by its issuer can reasonably bear the product’s risks.
ASIC announced the order against Fidante Partners on October 13. It lasts 21 days unless revoked earlier and restricts dealing in the product, supplying its disclosure statement and giving retail clients general advice recommending an investment.
The regulator’s objections concern the fund’s target market determination, the document that identifies whom a financial product is designed to serve. ASIC questioned its treatment of investors seeking capital preservation, its medium-to-high risk profile, the prospect of allocating as much as half a customer’s investable assets and the proposed timeframe for accessing capital.
The fund held A$799.9 million in assets at June 30. Its investments include bonds, syndicated loans and asset-backed securities; investors can also face exposure to subordinated collateralised-loan-obligation tranches.
The action is an interim distribution restriction arising from ASIC’s surveillance of private-credit products. It is not a final judicial finding of wrongdoing by Fidante or Ares.
