LM-Trilogy dispute escalates
LM Investment Management has described as hostile and opportunistic the attempt by Trilogy Funds Management to take over as the responsible entity (RE) for two mortgage funds.
Earlier this week, Trilogy Funds Management issued a press release claiming investors holding 48 per cent of units in two 'feeder funds' of the LM First Mortgage Income Fund called for Trilogy to replace LM as the RE for these funds.
Trilogy Group chairman Rodger Bacon said the company had initially been approached by a group of New Zealand investors calling for meetings to vote on a change of the funds' RE.
"All these investors want LM out; they want openness, a simple, professional wind-down of the funds and return of their capital," Bacon said.
"It is easy to understand why unit holders have become so embittered with LM. The Main Fund has been frozen for close to three years, the value of its units has fallen from $1 to $0.73, and 89 per cent of the loans are in default," he added.
"Unitholders are also concerned with LM's management of conflicts of interest with respect to related party lending between the Main Fund and the Managed Performance Fund (another LM fund)."
Trilogy also used the press release to market its own proposal to investors.
However, LM said Trilogy's 48 per cent figure was inaccurate and misleading, claiming the takeover bid had been initiated by only three investors who indirectly hold less than 10 per cent of units in the main fund.
Furthermore, LM chief executive Peter Drake said the information Trilogy was using was "superficial at best".
"Trilogy has no knowledge of the assets of the fund; it is important that investors understand the position of the fund and its assets entirely and comprehensively, before making any decision with respect to any offer or vote that Trilogy or any entity presents," Drake said.
"Of course investors are frustrated by the period of closure of the fund, which is about to change; LM has a solid sales campaign in place that is progressing well, with a number of large transactions due to settle towards the end of the year."
He also referred to Trilogy's takeover as RE of City Pacific's mortgage income fund and its falling returns in the months since.
"We cannot stress enough the importance for all investors to think clearly and rationally about the RE of the fund," Drake said.
A meeting where unit holders will have a chance to vote on the matter will be held next month in Sydney.
Recommended for you
A growing trend of factor investing in ETFs has seen the rise of smart beta or factor ETFs, but Stockspot has warned that these funds likely won’t deliver as expected and could cost investors more long-term.
ASIC has released a new regulatory guide for exchange-traded products (ETPs), including ETFs, on the back of significant growth in the market.
Assets in Macquarie Asset Management’s active ETFs have tripled to $2 billion in the last six months, helping the division deliver a net profit contribution of $1.1 billion.
With property becoming increasingly out of reach for young Australia, Vanguard has proposed a tax-incentivised scheme to help cash-heavy individuals build wealth.
