The corporate regulator has slapped an interim stop order on the RELI Capital Mortgage Fund, saying aspects of the fund’s target market determination may expose retail investors to a product that does not match their objectives, financial situation or needs.
The order prevents RELI Capital Limited from issuing interests in the fund to retail clients, providing a product disclosure statement for it, or giving general advice that recommends an investment in the fund. It is in force for 21 days unless revoked earlier.
ASIC said it was concerned the fund’s target market included investors who might use it as a core portfolio holding representing between a quarter and three-quarters of their assets; that the stated low-to-medium risk label was an incomplete picture of the fund’s risk; that it was described as suitable for investors seeking to preserve capital; and that no distribution conditions were specified.
The action stems from ASIC’s surveillance of retail private credit products, which has examined fund transparency, governance, valuation practices, management of conflicts and fair treatment of investors as part of the regulator’s broader response to shifts in Australia’s capital markets.
As at 31 December 2024, the fund had $50.9 million in net assets under management. RELI Capital is not the responsible entity of any other registered managed investment scheme.
Under design and distribution obligations, product issuers must define target markets for each product with sufficient granularity and close regard to the product’s risks and features, and put in place appropriate distribution conditions to ensure products reach the intended investors. Since the regime began, ASIC has issued 95 interim stop orders and one final stop order.
ASIC has encouraged existing investors to consider whether the fund remains appropriate for their circumstances and, if necessary, seek advice from a licensed financial adviser.
