The categories of eligible managed fund investments for significant investor visa holders have recently been expanded. The new categories are: annuities, derivatives, mortgages and interests in unregulated managed funds. Changes to the existing categories provide for a wider range of investments in those categories.
From 23 November 2013, ASIC-regulated fund managers operating complying managed funds will be able to invest in the classes of investments set out in the table below (changes to existing categories are underlined).
Clients operating or proposing to operate registered or unregistered schemes for SIV investors will need to consider whether they have the appropriate authorisations on their AFS licence and appropriate investment powers in their trust deeds or constitutions before making changes to the asset classes within the products they offer.
While a scheme catering to SIV investors may not need to be registered, a number of operators are choosing to register schemes so that they can offer a higher standard of compliance and professional management to a foreign investor base.
We note that the categories of eligible investments in government bonds and Australian proprietary companies have not changed.
| Category | Description on new list | Comparison with previous list |
| Infrastructure projects | (a) infrastructure projects in Australia | Same |
| Cash | (b) cash held by Australian deposit taking institutions (including negotiable certificates of deposit, bank bills and other cash-like instruments) | Clarifies the wider range of cash-like bank instruments that are eligible under the definition of “cash” |
| Government Bonds | (c) Bonds issued by the Commonwealth Government or a State or Territory Government | Same |
| Corporate Bonds | (d) bonds, equity, hybrids or other corporate debt in companies and trusts listed or expected to be listed within 12 months on an Australian Stock Exchange | Provides a wider range of securities for fund managers to invest in |
| Fixed Interests | (e) bonds or term deposits issued by Australian financial institutions | Same |
| Real Estate | (f) Real property in Australia | May allow a broader range of property to be included in a fund |
| Australian Agribusiness | (g) Australian Agribusiness | Same |
| Annuities | (h) annuities issued by an Australian registered life company in accordance with section 9 or 12A of the Life Insurance Act 1995 | New category providing a form of guaranteed income through an annuity |
| Derivatives | (i) Derivatives used for portfolio management and non-speculative purposes which constitute no more than 20 per cent of the total value of the managed fund | New category allowing investment managers more scope in the management of the fund |
| Mortgages | (j) loans secured by mortgages over the investments listed in (a) to (h) above | New category allowing scope for investment in property development where loans to developers may be the asset of the fund |
| Other ASIC regulated managed investment schemes | (k) other managed funds that invest in the investments listed in (a) to (j) above | The removal of the requirement for other funds to be ASIC-regulated means fund managers can invest in unregistered wholesale trusts |
For further information, please contact:
| Mark Bland Partner T: (03) 9605 0832 E: mbland@millsoakley.com.au |
Lauree Blair Senior Associate T: (03) 9605 0807 E: lblair@millsoakley.com.au |