A cheaper way for an ASX fund listing

By Penny Pryor

Funds are increasingly looking at different ways to provide access to end investors. Many explore listing on stock exchanges and Australia now has over 200 exchange traded funds, or ETFs, for investors to choose from.

But the process of getting a standalone ETF on the market can be long and involved and another option available to product issuers is launching a quoted class fund or a new class for an existing fund.

Kate Mulligan is managing director and co-founder of law firm and consulting business King Irving which specialises in assisting funds in this area.

"One of the things about it is it's much cheaper, and it's much faster than the traditional way of getting a fund up as an ETF," she says.

"Normally getting a whole fund out for an ETF can be quite expensive and quite a fraught process. And you also end up with documents that are pretty unwieldy, because they have to talk about the different ways you can access the fund."

Mulligan says that one of the main benefits of a quoted class is there is no need for fund managers to hold investor meetings of the existing investors to approve changes to a fund's constitution.

"You create a new class and by creating a new class, and quoting the new class, you don't have an issue with existing investors," Mulligan says.

"If [fund managers] do it this way, it doesn't disrupt existing investors, it's much faster to market - somewhere between three to six months, and it would be about a third of the price that you normally pay for an ETF quotation."

King Irving recently helped Milford Australia with the launch of their Milford Australian Absolute Growth Fund - Quoted Class. Mulligan says that while quoted classes were common for passive funds, launching quoted classes for active funds is relatively new in Australia.

King Irving has busy pipeline in terms of funds looking for quoted class listings.

"It just seems it's a very interesting time to market I'm not sure I've seen it as busy as I'm currently seeing it," she says.