Two more ING funds closing

ING New Zealand is closing two other credit funds as well as seeking to wind up its bigger Diversified Yield Fund and Regular Income Fund.

Wednesday, December 10th 2008, 11:11PM
It says that it is to wind up the $27 million Enhanced Yield Fund (EYF) and the $8 million Credit Opportunities Fund (COF).

ING NZ chief executive Helen Troup says there is no investor demand for credit funds, and some such as the COF were seeing large levels of redemptions. For instance ING received redemption requests worth $1 million for the EYF fund on Tuesday.

It hadn’t helped that research house Morningstar recently put an “avoid” warning on COF.

“These two funds were established in a fundamentally different market environment from the one the world now finds itself in. The financial world has changed dramatically for all of us,” Troup said.

She said in October and November credit fund markets “crashed”.

“Investors are not looking for these funds.”

She also acknowledged that investors were withdrawing money to put into offers which had a government guarantee.

Troup said COF was “essentially winding itself down,” but things were getting tricky as the proportion of CDOs in the portfolio was increasing as the fund shrunk. The CDOs are the main problem assets and ING had a concern that the last people in the fund would be disadvantaged as the last assets to be sold were the least valuable.

She says the EYF fund was made up of mortgages and these were hard to sell in the current market.

Investors will be given the choice of “immediately” winding up the funds, or electing to put them into a longer “managed wind up” process.

No further withdrawals or applications will be processed for either fund. The funds are to be closed and wound up.

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