The PIF Action Group (PIFAG) is gearing up for a fight next month when unit holders meet to vote on a change in the Premium Income Fund's (PIF) constitution that could remove Wellington Capital as fund manager.
PIFAG claimed it was building support for its push to replace Wellington with Castlereagh Capital. The group said it had the support of nearly 30 per cent of investors, including individuals, professional investors and advisers exposed to the fund. It said it was actively phoning investors to garner support for its stance.
"Our movement has been driven largely by retiree investors - most of whom believed they were putting their money into a safe, income-producing investment," PIFAG vice president Charles Hodges said.
PIFAG is made up of PIF investors unhappy with the performance of the fund, which has not made a profit since mid-2007. Its net financial loss of $35 million last financial year narrowed slightly from a net loss of nearly $40 million a year earlier.
The group would sidestep a $5 million removal fee payable to Wellington by convincing unit holders to change the fund's constitution at a meeting on 16 June.
If the vote is successful, investors could recoup 50 cents per unit.
Castlereagh executive director Tony Pope said while it was encouraging to see investors fighting back, not enough was being done to help those in frozen funds.
"These investors have seen their assets within the fund fall by 60 per cent and their unit holdings will be diluted by more than 17 per cent as a result of the recent placement and rights issue under the steerage of Wellington," Pope said.
"The PIF Action Group have highlighted to ASIC what we believe are numerous breaches by Wellington in relation to their responsibilities to investors. To date, ASIC has advised they are unable to act. Whether this is due to insufficient legislative authority or a lack of resources is unclear."
Pope said investors in similar funds would be watching the proceedings.
