The non-bank lender had previously pushed back strongly against Count’s move, questioning the basis for the recommendation and highlighting its long-term performance record.
Back in March, Count advised its 550 advisers to sell out of the ASX-listed Metrics Master Income Trust and Metrics Income Opportunities Trust, as well as the unlisted Metrics Direct Income Fund, warning of risks in private credit.
At the time, the decision raised eyebrows, particularly given the high ratings assigned to them by Lonsec and claims that Count made the call without meeting with Metrics – something understood to be a standard step in any due diligence process.
Lonsec has now downgraded the Income Opportunities Trust from “recommended” to “investment grade”, and the Master Income Trust from “highly recommended” to “recommended”. The downgrades were first reported by the Australian Financial Review, but have been verified by Money Management’s sister brand, InvestorDaily.
InvestorDaily understands that the unlisted Metrics Direct Income Fund has also been downgraded from “highly recommended” rating to “recommended” by Lonsec.
These revisions place greater scrutiny on governance at Metrics and add weight to concerns first raised by Count.
Lonsec rates funds as highly recommended, recommended, investment grade, fund watch, redeem, or screened out.
Metrics managing partner Andrew Lockhart previously criticised Count for making its recommendation without meeting with the firm, noting that repeated invitations from parent company Pinnacle Investment Management to engage had been declined.
“I am disappointed that the position that they have got to is a recommended redeem, and I’m certainly not aware of any reason why that would be an appropriate recommendation for an investor,” Lockhart said at the time.
In a separate statement made to InvestorDaily at the time, a spokesperson for Metrics said: “We’re very proud of the strong performance outcomes we’ve delivered for investors.
“Private credit is growing because the asset class is meeting the needs of a large investment cohort, in particular those seeking an allocation that can provide capital stability, income and portfolio diversification. We strongly believe this growth has a very long way to go.”
The developments come as the corporate regulator continues to monitor private credit and private markets more broadly.
Just last month, the corporate watchdog signalled it will not sit on the sidelines as private markets boom, declaring it is “not a passive observer” and will not take a “wait and see” approach.
InvestorDaily understands the regulator is preparing to release a progress report on private credit later this month, with further detail on surveillance findings to follow later in the year. A draft report, seen by some market participants, is said to call out both good and bad practices and has reportedly been well-received.
ASIC has already flagged that its survey of private credit managers will focus on governance, valuation, liquidity, conflicts of interest, fees, disclosure and distribution.
InvestorDaily understands that Metrics has maintained its high ratings with Zenith.
Lonsec has maintained its policy of not publicly commenting on its research decisions.
