Fund suspensions

Click on the relevant suspended fund listed below for further details:

Update on suspended funds - July 2012

In late 2008 a number of investment funds were suspended due to events associated with the GFC. Since then we have continually worked on ways to return capital to impacted investors on a regular basis. To date, almost $2 billion has been returned to investors across our superannuation, retirement and investment products.

Click here for further details on why funds were suspended, why they remain suspended, and the progress we have made to date in terms of returning capital to investors.

 

Why were the funds suspended and why do they remain suspended?

We have been carefully assessing the long-term solutions for the funds that are currently suspended. This is an extremely complicated, unprecedented situation faced by many fund managers in the industry. It is therefore important to understand why the funds were suspended in the first place and why they remain suspended.

The reason for the initial action taken and for why the funds remain suspended is that the funds affected have made investments into assets which are not liquid and readily realisable on a daily basis. For example:

  • OnePath Mortgage Fund (including Income Plus) invests into mortgages lent to property owners
  • AXA Australian Property Fund invests directly into actual buildings
  • Challenger Howard Mortgage Fund invests into mortgages lent directly to property owners and developers
  • AMP Capital Enhanced Yield Fund invests into a large proportion of high yielding private debt (loans).

During the Global Financial Crisis these funds experienced a greater volume of redemption requests and the assets could not be easily and quickly sold. As a result, the managers of these funds suspended them to ensure that the assets in these funds could be managed and continue over time to produce a return to investors through the orderly realisation of assets rather than ‘fire sales’. This was the preferred option rather than simply writing down these assets and realising massive losses in each of these funds, which would not have been in the investors' best interests.

Since the GFC, many asset valuations have recovered. However, liquidity has not and where the assets are not traded on markets (such as mortgages) it remains difficult to sell these investments for appropriate valuations. Each of the funds above has increased their liquidity by selling assets where possible, by not making further investments and through holding proceeds of sales in cash or cash-like instruments. However they still have some distance to go.

OnePath (as well as each of the managers mentioned above) is committed to finding a long-term solution to the issue as soon as possible. There have been a number of recent developments regarding some of the suspended funds. Please click on the link of the specific fund above for further details.