Asset manager Perpetual joined rival Challenger in halting fund redemptions and applications yesterday, after the Federal Government’s deposit guarantee caused a surge in withdrawals.
Perpetual’s move applies to its monthly income and mortgage funds, which hold $2 billion in funds under management (FUM).
Some of these funds are available on Perpetual’s WealthFocus platform.
The action was the fairest and most equitable approach for all investors in the funds, many of whom are retirees with modest balances, Perpetual group executive of income and multi-sector Richard Brandweiner said in a statement to the market.
“Regrettably, the recent introduction of the guarantee on bank deposits and subsequent actions by other parties has incited uncertainty in the market, and created a sudden spike in redemptions in the past few days,” he said.
“In this context, we must act prudently to protect the interests of all investors in the funds.”
Distributions paid by the funds remain unaffected, and Perpetual intends to allow investors to redeem quarterly, depending on the money available as securities mature in the portfolio.
The freeze specifically applies to Perpetual’s Wholesale Monthly Income Fund, Monthly Income Fund, WealthFocus Super and Pension Fund’s Mortgage Option, Perpetual WealthFocus Investments Mortgage Fund, Perpetual’s Term Fund and Private Investor Mortgage Fund.
The Challenger Howard Mortgage Fund, Australia’s biggest mortgage fund strategy with $3 billion in FUM, received a flurry of downgrades on Monday after Challenger froze redemptions in the product.
In a crisis meeting held on October 11 and 12, Prime Minister Kevin Rudd said the Federal Government will protect all deposits and wholesale term funding for the next three years.
