Research house van Eyk has warned that investors within its multi-manager Blueprint Australian Shares Fund (BASF) may not receive a distribution for the third consecutive period after the product incurred tax losses on derivatives.
"The reason why the Australian Shares Fund is unlikely to have a distribution at December 2009 is that there were large tax losses carried forward from June 2009 due to losses incurred in the 2008/09 financial year as a result of investing in futures used to equitise cash," a van Eyk spokesperson said.
"During the recent period of record decline in the value of the Australian share market, the fund was partially invested in futures contracts to maintain market exposure in place of managed funds while the fund's portfolio was being rebalanced.
"The nature of futures contracts is such that any losses or gains are crystallised when it comes time to roll or close out a position, which occurs every three months."
Due to the rapid decline in the market prior to the March rally, van Eyk's BASF incurred losses on the futures contracts greater than the after-fee income received from its underlying managers.
"The fund therefore did not have net income for the financial year and a distribution was not possible," the spokesperson said.
"Distributions will recommence once the trust earns sufficient income from its underlying managers to offset the carried forward losses. It cannot be predicted when this will be."
Although many financial advisers have contacted van Eyk regarding BASF's lack of distributions, the spokesperson said advisers continued to remain confident in the research house.
Van Eyk's BASF has also shifted towards a value bias by increasing its allocation to managers including Bernstein and Integrity, while reducing its weighting towards Fidelity and Solaris.
