Why listed investment trusts can work for retirees

Chris Paton, chief investment officer at La Trobe Financial, takes a deep dive into how listed investment trusts work, and how they can play a role in retirement portfolios.

Ask any retiree and they'll likely tell you retirement isn't all sunshine and relaxation.

One of the chief challenges is replacing regular wage or salary with regular investment income.

In today's environment of volatility, and now looking towards falling interest rates, traditional cash-based investments can work against retirees' wealth.

It makes listed investment trusts, also known as listed investment funds, an appealing option for retirees looking for ease of access, liquidity, and strong, regular income.

Recognising this appeal, La Trobe Financial recently launched our ASX-listed La Trobe Private Credit Fund. For the first time, investors will be able to invest with us on the ASX.

To understand why this is so exciting for investors, let's take a closer look at how listed investment trusts work.

How listed investment trusts work

Listed investment trusts operate in much the same way as traditional managed funds.

Investors' capital is pooled and spread across a variety of assets, giving investors the benefit of diversity in a single investment.

Investors receive regular distributions, sometimes with the potential for capital growth over time.

However, as the name suggests, 'listed' investment trusts are listed on the Australian Securities Exchange (ASX).

This is a major point of difference from unlisted funds - one that offers valuable advantages, especially to retirees.

The upsides include:

• Low capital entry requirements - getting started with a listed investment trust is easy. The ASX minimum for an initial investment can be as low as $500. 
• Liquidity - like all ASX securities, units in listed investment trusts can be bought/sold in a matter of minutes.^{^} This gives investors the flexibility to access their money if funds are needed.
• No fixed investment term - an investor can choose to stay with a listed investment trust for as little or as long as they choose. There is no set, or minimum, term.

The appeal of listed investment trusts for retirees

Along with low capital requirements and liquidity, listed investment trusts offer the expertise of a professional team of managers.

This lets retirees take a hands-off approach, so they can focus on other aspects of their life.

That said, it is important for all investors to take a good look under the hood of a listed investment trust to know where their money is being invested.

This will not only shape how much risk a listed investment trust brings to your portfolio, it can also shape returns, and the frequency of distributions.

Why La Trobe Financial has launched a new listed investment fund  

Private credit can be a defensive asset class that has long been popular with retirees as a source of regular income.

At La Trobe Financial, we have listened to the needs of our 110,000 investors*, and responded with the launch of a new listed investment trust - the La Trobe Private Credit Fund (ASX: LF1).

It brings together our two flagship, complementary strategies, our 12 Month Term Account and US Private Credit Fund into one convenient vehicle for investors.

Each holds a portfolio of quality private credit assets diversified across risk exposures, income sources, and market opportunities, with a margin for safety embedded within each.

We understand that investors, notably retirees, like to gain an idea of potential returns. And we are very transparent about this.

The La Trobe Private Credit Fund has a target cash distribution yield equal to the Reserve Bank's Official Cash Rate plus 3.25% per annum net of fees and costs.^**

What is particularly exciting for retirees, is that the La Trobe Private Credit Fund aims to pay distributions monthly, providing the opportunity for regular and robust income.

Investing for regular income just became easier

We encourage investors to understand the risks behind any investment.  There is no guarantee of the investment result, or the target cash distribution yield being achieved.  And listed strategies also have the risk of fluctuations in share price, which can impact your capital value, or ability to redeem funds.  So, carefully consider how a listed investment trust could play a role in their portfolio.

But as interest rates head lower, the La Trobe Financial team is delighted to give Australian investors a new opportunity that provides conservative and diversified exposure to private credit, with the convenience and flexibility of investing via the ASX.^{^}

It's an avenue for investors to tap into what we anticipate will be a strong monthly income stream.

*Total investors is calculated by adding all individual & joint investors (which includes some investors with a current zero balance in their account) to reasonable estimates of investors investing trusts or SMSFs.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321, the La Trobe US Private Credit Fund ARSN 677 174 382 and the La Trobe Private Credit Fund ARSN 686 964 312 (ASX:LF1). It is important that you consider the relevant Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on our website.

**The target cash distribution yield is an objective target only and may not be achieved. Any shortfall in net income generated may result in a distribution payment made out of capital invested. Future returns are not guaranteed and a loss of principal may occur. Investors should review the Risks summary set out in Section 8 of this PDS. The first distribution is expected to be paid with reference to the period ending on 31 July 2025, with July 2025 being the first full month following the Settlement Date.

^Units can be bought and sold on the ASX during trading hours, subject to their being sufficient supply and demand and the units not being suspended from trading. Cash from sales of units will be available subject to normal ASX settlement (currently +2 business days) or as agreed with your broker. Brokerage costs will also be payable, as agreed with your broker.

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