Investors face year-long wait

By ROELAND VAN DEN BERGH - Businessday | Tuesday, 26 August 2008

Investors in NZ Funds' frozen $64 million Super Yield Fund will probably have to wait about a year to have all their money returned, fund boss Richard James says.

The fund was closed on August 18 after a rush of withdrawals during the last two months. A total of 1450 investors remain in the fund. They have been told that they would be repaid over time, with about a quarter expected on October 15 as a first instalment.

The eight-year-old Super Yield Fund, structured as an Australian unit trust, peaked at $347m early last year, but its value has dropped to $64m as the assets fell in value and about half the original 3100 investors either switched to new tax-efficient portfolio investment entities regime funds or withdrew their money.

James said yesterday that most of the remaining investors, representing $50m in value, had asked to leave the fund. Out of that, $40m would switch to other income funds.

In order to meet those demands, the fund's remaining assets would have to be sold.

Given that not all of the assets could be immediately sold, the fairest outcome was to close the fund, sell the remaining assets, and progressively repay investors, James said.

The fund's remaining assets were about 25 per cent cash, another 50% in global credit instruments and 15% in loans, mainly property.

Less than 1% would be exposed to the troubled United States subprime mortgage market, James said.