This article is from the Australian Property Journal archive
AXA New Zealand has suspended trading and redemption in its $229 million Mortgage Backed Bonds fund.
AXA NZ’s chief executive Ralph Stewart said the move was a precautionary measure to preserve overall fund liquidity and it was no reflection on the quality of the fund.
“AXA’s decision has been made in the best interests of investors. No fund manager likes suspending withdrawals, but they also have a duty to take necessary actions to protect the interests of all investors.
“These are difficult times for investors. Unfortunately as investors come under stress they naturally seek security of mind, which at times may prompt them to make hasty, short-term decisions at odds with their longer-term interests,” he added.
This partial suspension is intended to be in place for at least 90 days.
“The Mortgage Backed Bonds fund has good levels of liquidity, currently 14%, it has no arrears and it has never had a default. There are no property developments in the portfolio and all the buildings over which mortgages are held are established and well-tenanted. There are no related party loans.
“The reality is that this is a solid investment which has delivered attractive, consistent returns. The fund is performing well, however we cannot ignore the market sentiment and the impact this is having on investor confidence,” he continued.
Stewart said smaller investors (Class A) may continue to invest or withdraw as usual but he added it is possible that if withdrawals from smaller investors dramatically increase, AXA NZ may be forced to suspend trading in the retail bonds as well.
The Mortgage Backed Bonds fund has $229 million in funds under management and invests in first-ranking mortgages over NZ commercial properties, fixed interest securities and cash.
It offers two types of holdings: Class A Bonds for individual investors and Class C Bonds for wholesale or institutional investors. There is currently $112 million in Class A Bonds and $117 million in Class C Bonds. The suspension relates only to Class C bondholders with $1 million or more invested in the fund.
Australian Property Journal
