La Trobe has two of three stop orders lifted
ASIC has withdrawn restrictions on two of the three La Trobe Financial funds that were halted last week.
The two funds now reopen to investment are the 12 Month and 2 Year Accounts of the La Trobe Australian Credit Fund.
In addition, La Trobe Direct - the online investment platform - is back online after it was shut down earlier this week.
However, stop orders remain in place for the US Private Credit Fund (USPC Fund).
As part of the process, La Trobe updated its Target Market Determinations (TMDs) and introduced customer questionnaires.
When asked how La Trobe was determining the risk profiles of investors prior to the introduction of the questionnaires, La Trobe chief investment officer Chris Paton told Financial Standard: "We have a robust DDO framework ensuring that our products are distributed to their respective target markets."
"Each self-directed investor is assigned a dedicated relationship manager, who are trained specifically on the principles of the DDO regime. We complement this with market-leading transparency and disclosure, ensuring investors are clear on what they're investing into."
ASIC said it continues to have concerns around La Trobe's TMD for the USPC Fund.
Those concerns include that the TMD suggests an inappropriate level of portfolio allocation given the risks of the fund and does not adequately specify an investment timeframe for retail clients.
La Trobe chief executive Chris Andrews welcomed ASIC's decision to lift the stop orders on the Australian credit funds.
"The stop orders didn't relate to the funds' performance, liquidity, advertising or the product disclosure statements. We champion transparency and welcome the opportunity to improve our TMDs for the benefit of investors," Andrews said.
He added that La Trobe will continue to work with ASIC and will have announcements regarding the USPC Fund (Class B) soon.
ASIC said the USPC fund invests primarily into a portfolio comprised of senior secured first-lien term loans issued to US corporate middle market companies.
It said these US companies are not rated by any rating agency and investing in these loans involves an above average amount of risk and volatility or loss of principal.
"Under the design and distribution obligations (DDO), financial product issuers and distributors must ensure the product's TMD is clear and appropriately defines the target market and accurately reflects the product's risks and features," ASIC said.
This article first appeared on Financial Standard
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