S&P monitoring sub-prime fallout
A warning by hedge fund manager Basis Capital last week that it could be forced to limit investor withdrawals to avoid collapse has not impressed Standard & Poor’s Fund Services.
The ratings service announced today that it would be seeking a meeting with Basis’ management to discuss the underperformance of its Basis Yield Fund and Basis Aust-Rim Fund against the backdrop of adverse developments in the structured credit market.
S&P will essentially ask Basis, which has about $2 billion in funds under management, to address the underperformance of the two funds in the light of disappointing estimates of the two funds’ June performance.
“We will be seeking to obtain a greater understanding of the underlying causes of the poor performance of the two funds … prior to clarifying their current ratings,” said S&P fund analyst David Erdonmez.
The June performance projections were the trigger for Basis’ warning — carried in a letter to clients — that it could be forced to invoke a contractual clause to prevent a potential run of withdrawals by worried clients.
This clause, which has not been used in Basis’ eight-year existence, prevents clients pulling out their investments for the funds after the funds have incurred losses of up to 14 per cent.
AUTHOR
Recommended for you
A former AMP adviser told the Federal Court how they are scared to turn off their phone after a fellow adviser attempted suicide as Justice McElwaine said the 92 objections “weighed heavily” on his mind.
Providence Wealth Advisory Group has appointed a new chief investment officer, a dedicated position after the role was previously held by its CEO.
While hiring new staff in a financial advice practice inevitably incurs expenses, Striver’s Alisdair Barr says the greater business cost can come from losing the skills of a valuable team member.
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
