Monthly Listed Investment Trust Report – Nov 2025

This story features GRYPHON CAPITAL INCOME TRUST, and other companies.
For more info SHARE ANALYSIS: GCI

Download related file: IIR-Monthly-LMI-Update_11-November-2025

Independent Investment Research updates developments in Australia's listed investment trust and provides comparative data.

A Listed Investment Company (LIC) is a listed investment vehicle that offers investors access to a diversified portfolio of shares in other companies also listed on the stock market.

Note: For comprehensive comparative data tables for LICs and ETFs please see attached.

Gryphon Capital Income Trust

Gryphon Capital Income Trust ((GCI)) is a listed investment trust (LIT) designed to provide investors with regular monthly income through an actively managed portfolio of Residential Mortgage Backed Securities (RMBS) and Asset Backed Securities (ABS). The Trust is managed by Gryphon Capital Investments Pty Ltd (the “Manager” or “Gryphon”), a specialist fixed income manager wholly owned by Barings, a global investment manager specialising in public and private markets in fixed income, real assets and capital solutions.

The portfolio is positioned predominantly to RMBS with a focus on Prime RMBS, however exposure to ABS has become an increasing part of the portfolio due to increased opportunities available in the market. The Trust has amended the investment guidelines on a couple of occasions since listing to allow a greater allocation to ABS with the intent of the strategy always to be reflective of the market.

At present, 50%-100% of the portfolio will be allocated to RMBS, up to 50% allocated to ABS and the Trust may hold up to 20% in cash. While the Trust can hold cash, the Manager intends to be fully invested where possible with an average cash position of 3% over the life of the Trust.

As is evident from the changes in the portfolio over time, the portfolio is actively managed with the Manager rotating the portfolio to attractive risk-adjusted opportunities identified including secondary market transactions, with capital preservation being front of mind for the Manager.

The Trust has consistently met or exceeded its target distribution of RBA cash rate 3.5%p.a., net of fees and expenses, with the Manager providing exposure to a diversified portfolio of RMBS and ABS across the credit rating scale to achieve the target return.

The Manager invests in a range of tranches in issuances with the Trust having at least 50% of the portfolio invested in assets with an Investment Grade rating (AAA through to BBB) with no more than 10% of the portfolio in any one security. Over the life of the Trust, on average the portfolio has had a 66% allocation to Investment Grade securities and 32% to Non-Investment Grade securities.

The Trust is an income focused product and therefore is not appropriate for investors seeking capital gains. The primary objective of the Trust is to deliver a monthly income stream that meets or exceeds the target distribution while preserving capital. While there may be movements in the price of bonds, these movements have been minimal to date which has resulted in a steady NAV.

We view GCI to be at the lower-end of the risk spectrum for ASX-listed public and private debt vehicles, given Australian Prime RMBS has been loss remote and given the minimum exposure to Investment Grade securities.

RMBS has been a mainstay of the Australian fixed income landscape for several decades and there are key structural protections (borrowers’ equity, Lenders Mortgage Insurance (LMI), excess interest and bond subordination) that make Australian RMBS loss remote.

We view the Trust as an investment option for investors seeking an enhanced return on cash with downside capital protection.

IIR has assigned Gryphon Capital Income Trust a Highly Recommended rating (previously Recommended Plus). GCI has consistently delivered on its objectives since listing, actively managing the portfolio with a focus on capital preservation.

The Trust has delivered an attractive risk-adjusted return and is the only LIT on the ASX that provides exposure solely to RMBS and ABS providing a unique alternative fixed income exposure for investors.

The robust nature of the investment process provides us with a high level of confidence that the Manager will continue to deliver on its investment objectives and that in the event of a significant market dislocation that the Trust would outperform the broader market.

The integration with Barings is now largely complete and has provided improved corporate governance and oversight structures that comes with large organisations. The market has been highly supportive of the Trust which has enabled the Trust to continue to grow and has led to improved liquidity for investors and greater portfolio diversification.

While we have assigned the Trust our highest rating, investors should ensure that they are comfortable with the risks associated with the underlying investments and be aware that the underlying investments are floating rate securities and therefore returns will be impacted by movements in the RBA Cash Rate.

Pengana Private Equity Trust

Pengana Private Equity Trust ((PE1)) is a listed investment trust (LIT) that provides exposure to a portfolio of global private market investments. The Trust now has a track record of over 6 years, listing on the ASX in April 2019.

The Responsible Entity of the Trust is Pengana Investment Management Limited, who has appointed Pengana Capital Limited as the Manager of the Trust, both of which are wholly-owned subsidiaries of Pengana Capital Group Limited ((PCG)).

The Manager in turn appointed Grosvenor Capital Management, L.P. (“Grosvenor”) as the Investment Manager of the portfolio. Grosvenor is a specialist alternative investments manager based in the US with over US$82b in AUM as at 31 March 2025.

The Trust seeks to generate attractive risk-adjusted returns over the long-term through an investment in a diversified portfolio of private market investments, including private equity, private credit and other opportunistic investments.

The Trust generally provides exposure to these asset classes via funds, however has the ability to invest directly. The Investment Manager can invest in funds issued and managed by Grosvenor and/or vehicles managed by third parties.

The Trust has an internal long-term target return of 8%-14%p.a. and pays a distribution of 4%p.a. Distributions are paid on a semi-annual basis and represent 2% of the NAV at the end of the semiannual period.

An investment in PE1 is suitable for those investors seeking access to an alternative investment that offers potential diversification benefits to an investors’ broader investment portfolio. Private equity investments typically require a 5-10 year period to realise the value of investments.

As such, investors should have a long-term investment horizon to realise the full potential value of an investment in the Trust. The Trust has invested in secondary market investments and opportunistic investments which have the potential to reduce the time to realisation of returns and enhance returns by investing in funds at a discount.

Private equity investments have an additional layer of risk to listed companies due to the lack of liquidity and limited transparency. The Trust provides exposure to a diversified portfolio with exposure to over 550 underlying companies, reducing the risk associated with any single investment.

However, given the limited transparency with regards to the underlying investments, investors should have confidence in the investment capabilities of the Investment Manager in the asset class.

IIR has reaffirmed its Recommended Plus rating for Pengana Private Equity Trust. We hold Grosvenor in high regard with the Trust providing retail investors access to an expansive private markets platform that provides access to top quality fund managers and private market investment opportunities.

The Trust provides exposure to a highly diversified portfolio of companies that is not readily accessible to investors. Performance has been subdued in recent years as a result of market conditions, however we expect the Trust to deliver on its return objectives over the long-term.

Performance has no doubt been a contributor to the demand for the strategy given the returns provided by global equity markets. This combined with other factors has led to the Trust trading at a material discount, one which we believe offers longterm investors an attractive opportunity.

The Trust has commenced a buyback program to address the discount and has stated that they are willing to materially reduce size of the Trust to address the current supply and demand imbalance, although will need shareholder approval to increase the buy-back program capacity if the Trust was seeking to take a more aggressive approach.

While we welcome the buy-back to address the supply and demand imbalance, the Trust will have to manage the process to ensure that the Trust is not reduced to a point where liquidity becomes a major issue for remaining unitholders. Once the discount is addressed, we would expect the Trust to look to once again grow the Trust.

This too would need to be managed carefully to ensure growing the Trust does not create another supply and demand imbalance.

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