The Race to Find Monthly Income

Why It Matters

The product gives Australian retirees a tax‑efficient, predictable income stream as the hybrid market disappears, and it highlights a broader shift toward structured, dividend‑focused vehicles in the equity market.

Key Takeaways

• Solaris LIC aims to raise ~AU$300m (~US$200m) on ASX
• Targets monthly fully franked dividends, first payout Aug 2026
• Uses retained earnings to smooth payouts across market cycles
• Strategy delivered 8.36% income, 10.89% total return historically
• Fills income gap left by APRA’s hybrid market wind‑down

Pulse Analysis

The Australian financial landscape is undergoing a rapid transformation as the regulator APRA accelerates the wind‑down of the $14.5 billion (≈US$9.6 billion) bank hybrid market. Hybrids, which blended equity and debt characteristics, once offered high‑yield, tax‑advantaged returns but fell out of favor after the Credit Suisse collapse exposed repayment risks. With investors—especially retirees—facing a shrinking pool of income‑generating assets, fund managers are scrambling to fill the void with products that preserve the franking credit advantage while delivering regular cash flow.

Solaris Australian Equity Income Plus (ASX: SET) is a direct response to that demand. The listed investment company will debut on April 17, targeting a capital raise of roughly AU$300 million (≈US$200 million) and a minimum subscription of AU$175 million (≈US$115 million). Its core promise is monthly fully franked dividends, a rarity in the Australian market, supported by a strategy that retains earnings to buffer payouts during volatile periods. The underlying fund’s track record—8.36% annual income and 10.89% total return—provides a solid foundation, while a proprietary dividend‑forecasting model, built on over 500 annual management meetings and coverage of 220 companies, aims to capture special dividends now favored after the 2022 ban on off‑market buybacks.

For retirees and income‑focused investors, Solaris offers a tax‑efficient alternative to the disappearing hybrids, potentially stabilising retirement cash flows amid uncertain market cycles. The launch also signals a broader industry trend: a move toward structured equity vehicles that combine growth potential with reliable, franked income. As more managers emulate this model, the Australian market could see a resurgence of dividend‑centric products, reshaping how investors approach long‑term income planning.