ASIC stops Fidante fund unit sales over target market deficiencies

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ASIC halts Fidante fund sales

Highlights

ASIC issued a 21-day interim stop order preventing Fidante Partners Limited from issuing Class A units in the Ares Global Credit Income Fund to retail clients due to target market concerns.
ASIC determined the fund's target market determination may not align with retail clients' objectives and flagged risks in portfolio allocation, capital access timeframe, and exposure to subordinated CLO tranches.
As of 30 June 2026, the Ares Global Credit Income Fund holds A$799.9 million in assets under management, investing in global bonds, loans, asset-backed securities, and derivatives.

Regulatory action on private credit distribution

As reported by ASIC, the interim stop order prevents Fidante Partners Limited from issuing Class A units in the Ares Global Credit Income Fund to retail clients because the regulator considers the product's target market determination may be inappropriate under design and distribution obligations.

The order also stops Fidante from dealing in the product, giving a product disclosure statement for it, or providing general financial product advice to retail clients recommending an investment. It remains in force for 21 days unless ASIC revokes it earlier.

ASIC says it is concerned the product would be unlikely to align with the objectives, financial situation and needs of a retail client within Fidante's stated target market. The regulator points in particular to descriptions suggesting the fund suits consumers with a medium to high risk and return profile while also suiting those seeking capital preservation, alongside what it sees as an inappropriate portfolio allocation of up to 50% of investable assets and an unsuitable timeframe for access to capital.

ASIC Commissioner Simone Constant says the step forms part of ongoing work to address risks in private credit. She says the regulator will act quickly where products may be reaching retail investors they were not designed for, with the aim of intervening early, disrupting poor practices and protecting investors from potential harm.

Fund profile and wider market implications

ASIC says the stop order arises from its surveillance of private credit funds, which is focusing on distribution to retail clients through direct and advised channels, as well as fees, margin structures and conflict-of-interest management in wholesale private credit funds.

As of 30 June 2026, the Ares Global Credit Income Fund has A$799.9 million in assets under management. The fund invests across global bonds, global syndicated loans in primary and middle markets, global asset-backed securities including commercial mortgage-backed securities and collateralised loan obligations, as well as derivatives, cash and cash equivalents.

The regulator also notes that investors may be exposed to risks linked to subordinated, or residual, tranches of CLO securities. Under Australia's design and distribution regime, ASIC can issue a stop order when a target market determination is unlikely to match the objectives, financial situation and needs of retail clients in the stated target market.

Our earlier coverage of EIOPA’s guidance on private equity-backed insurers explained how European supervisors are being urged to apply robust, traditional-insurer-level oversight to firms owned by private equity. The article highlighted the regulator’s focus on governance, risk management and supervisory consistency, aiming to mitigate potential risks to policyholders and overall market stability as alternative ownership models expand.

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