AM Corp winds down troubled fund
AMCorphas confirmed that it will wind down its troubled Diversified Traded Policies (DTP) Fund over a five year timeframe, after a tumultuous nine months in which the group was forced to shut the fund off from its investors to avoid a potentially lethal run on the fund’s assets.
The fund, which offered investments in traded life insurance policies, was temporarily closed last year because of a feared onslaught of investor requests to exit the fund following a downturn in performance as a result of September 11.
AMCorp had feared the fund, which has $600 million in funds under advice, would face severe liquidity issues as a result of the rush of investors looking to exit the fund.
But when the DTP Fund was finally re-opened in April this year, AM Corp was hit with an unexpected number of investors requesting to withdraw funds or switch to other investments, requests which surpassed the amount of the fund’s immediate liquid assets.
According to AM Corp chairman David Smith, more than 30 per cent of DTP fund members requested changes to their accounts.
A securitisation plan to the wholesale market about four months ago raised $115 million for the fund. However, the amount was insufficient to meet the requests and a further devaluation to bonus rates by MLC, and then AMP a few days later, also worked against AM Corp’s efforts.
Just one month after it reopened, AM Corp wrote to investors telling them the fund would be restructured to a five year fixed term product ahead of its impending closure.
AM Corp has offered investors the option of exiting the fund before the end of the five year period, but has warned investors they will receive only a discounted return on their investments.
“We have offered investors the choice to stay in or to elect to take whatever we can get for them now, which could be around 85 to 90 per cent,” Smith says.
He says $20 million of client money out of the $600 million funds under advice has already elected to exit the fund.
Recommended for you
Compared to four years ago when the divide between boutique and large licensees were largely equal, adviser movements have seen this trend shift in light of new licensees commencing.
As ongoing market uncertainty sees advisers look beyond traditional equity exposure, Fidante has found adviser interest in small caps and emerging markets for portfolio returns has almost doubled since April.
CoreData has shared the top areas of demand for cryptocurrency advice but finds investors are seeking advisers who actively invest in the asset themselves.
With regulators ‘raising the bar’ on retirement planning, Lonsec Research and Ratings has urged advisers to place greater focus on sequencing and longevity risk as they navigate clients through the shifting landscape.
