Realm meets strong demand with second ASX listed income vehicle

Realm Investment House, the Melbourne-based credit and fixed-income specialist, is set to launch its second ASX listed vehicle for 2025. Realm's initial offering, The Dominion Income Trust (ASX: DN1) sought to innovate on existing income LITs by addressing some of the equity-like characteristics that have plagued the sector, such as their propensity to trade below asset backing during periods of stress. 

Realm's view is that investors allocating to fixed-income are seeking the diversification benefits of the asset class as well as the regular income. While many LITs have delivered on the income component they have also tended to trade below their net asset value during times of market stress. In short, they exhibit equity like volatility when investors are seeking the capital stability of traditional fixed-income investments. 

Realm's thesis was put to the test shortly after the listing of the Dominion Income Trust with the volatility surrounding the Liberation Day announcements. The new structure withstood the test providing investors with capital stability and maintaining monthly income payments. 

Ken Liow, Head of Strategy and Risk at Realm, says investor demand for DN1 has been strong and despite a recent $45 million placement there remains unmet demand. 

“The feedback we received is that people can’t buy it in sufficient volume because holders don’t want to let it go,” Liow notes.

In response to this demand, Realm is launching a second ASX-listed vehicle, Dominion Income Notes 1 (ASX:DMNHA). In this Fund in Focus, I spoke with Ken Liow about the new offering and how Realm continues to innovate with fixed-income solutions on the ASX.

Watch the interview or read a summary below.

Introducing Realm Investment House

Realm Investment House is a fixed income and credit-focused investment manager that opened its doors in 2012. The firm has grown to a 36-person team, with 21 dedicated investment staff and more than $10 billion in assets under management across five strategies.

Ken Liow, Head of Strategy and Risk, explains that Realm is known for its conservative positioning: “All of our portfolios are investment-grade on average and not particularly volatile in nature.”

One of the firm’s key strengths is its willingness to step into areas where others hesitate. For example, when Credit Suisse collapsed in 2023 and its hybrids defaulted, contagion spread through global hybrid markets. Realm took the contrarian view, selectively buying into high-quality European hybrids from Barclays and Deutsche Bank, generating strong returns.

The Dominion Income Trust and its Innovation

Earlier this year Realm launched its first ASX-listed vehicle, the Dominion Income Trust (ASX: DN1). The aim was to solve a problem they observed with traditional listed investment trusts (LITs).

Credit portfolios are meant to diversify and stabilise equity-heavy portfolios. However, LITs often behave more like equities because they trade on market sentiment rather than the true value of underlying assets. Discounts to net asset value can persist for years, undermining diversification benefits.

Realm’s innovation was to list a single note with a five-year target call date and a fixed coupon of Bank Bill Swap (BBSW) plus 350 basis points, underpinned by a 4% equity buffer funded by Realm and related parties. This “first-loss” capital ensured strong alignment of interest.

The structure was put to the test almost immediately when Donald Trump’s “Liberation Day” announcement in April caused significant market volatility. While other LITs dropped sharply, DN1 traded steadily through the turmoil, demonstrating the resilience of the structure.

Launching Dominion Income Notes 1 (ASX:DMNHA)

Following DN1’s success, investors asked how they could access more of the product. Strong demand, coupled with limited secondary market supply, led Realm to plan a second offering: Dominion Income Notes 1 (ASX:DMNHA)

“The feedback we received is that people can’t buy it in sufficient volume because holders don’t want to let it go,” Liow notes. 

Even a $45 million placement in June did little to meet demand.

Dominion Income Notes 1 builds on the first trust’s design but simplifies it further by listing a note directly on the ASX, rather than wrapping it in a trust structure.

Key differences include:

• A six-year target call date (vs. five years for DN1).
• A wider 6% equity buffer, again funded by Realm, providing extra protection.

What role does Dominion Income Notes 1 play in a portfolio?

Dominion Income Notes 1 is designed to provide a reliable credit component within diversified portfolios. Liow emphasises that the structure has proven it behaves like credit should, offering balance and stability.

The new notes will pay BBSW plus 300 basis points. While this is lower than DN1’s initial margin (reflecting tighter markets), it still compares favourably with major bank hybrids, which currently yield around BBSW plus 200.

“It’s a healthy margin over what you’re getting in hybrids,” Liow says, highlighting the combination of yield, credit quality, and structural protections.

For investors interested in more information please visit the firm’s website: (VIEW LINK)