fat fund

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    Prophets show off plump little offspring
    By Michael Evans
    February 10, 2005

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    The name of the latest cash box rushing to market is just the first thing to prompt a raised eyebrow - the Fat Fund. Its ASX code? FATS.

    With a passing eye on nabbing retail investors at the top of the market, financial newsletter Fat Prophets yesterday launched its prospectus for a $40 million boutique listed investment company called Fat Prophets Australia Fund, or the Fat Fund.

    Fat Fund will issue 40 million shares at $1 each with an attached option exercisable at $1 within three years.

    Fat Prophets founder Angus Geddes said the fund had been launched in response to "strong demand" from the 7000 newsletter subscribers who "want a managed fund product alongside the newsletter". He said the timing was good as market conditions were "reasonably robust".

    Fat Fund is the latest in a series of cash boxes to tap into cashed-up, value-starved investors.

    Among recent listed investment companies (LICs), Wilson Investment Fund last traded at 94c, 6c below its issue price, and Pengana last traded at 88c, 12c below its issue price.

    AdvertisementAusbil Dexia said last week it too would launch an LIC.

    Fat Funds chief executive David Shearwood said there was no concern about a sharemarket newsletter buying and selling shares in a fund.

    The funds management business would be "a separate business entity" and a Chinese Wall would separate the two functions.

    "The funds team won't know what's coming through in the newsletter," Mr Shearwood said.

    Fat Funds would publish its cash holdings and top 15 stocks to the market each month and would have an independent chairman, he said.

    Fat Funds expects Fat Prophets subscribers to take more than 30 per cent of the stapled securities. Fifteen million were set aside for priority allocation.

    The float's retail emphasis is apparent in the minimum investment of $5000 - payable online via BPay. Retail brokers CommSec and Etrade are sponsoring brokers.

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