Colonial First State, ING and APN Funds Management have joined the ranks of the country’s leading mortgage funds that have suspended redemptions in the wake of the Government’s guarantee on banking deposits, locking up more than $6 billion of investor capital.

Colonial First State will suspend applications, daily withdrawals and switches relating to funds with significant investments in mortgages.

The funds affected are the Colonial First State Wholesale Income Fund, FirstChoice Wholesale Income option, FirstChoice Income option, Managed Investment Funds – Mortgage Income Fund, Bricks and Mortar Fund, Guaranteed Mortgage Fund and the Rollover and Superannuation Fund – Mortgage option. The total size of these funds is $3.3 billion as at September 2008.

Similarly, ING Funds Management (ING) suspended all applications and redemptions from its Mortgage and Income Plus funds (which invests substantially in mortgages). ING’s mortgage fund portfolio has approximately $1.8 billion in funds under management.

Both fund managers will continue to make the regular contributions and said the move does not reflect the quality and strength of the underlying investments.

Meanwhile, APN Funds Management’s ‘property for income’ funds, with a total $1.4 billion in assets as at last month, have also suspended redemptions. APN’s board expects to have a unitholder meeting in the first quarter of next year to review the funds’ liquidity options.

Financial Standard
by Michelle Baltazar
27th October 2008

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