Fund Times: 11 – 15 August
AEGON Set to Lift Property Funds Sale Restrictions; New Star Moves International Property Fund to Bid Price Basis; Invesco Perpetual Strengthens Asian Equities Team; FSA Fines Credit Suisse £5.6 Million; and UBS Forced to Overhaul Business after Large Write-downs
We noted previously (see Fund Times: 28 July – 1 August) that Scottish Widows would be lifting their property fund sales restrictions from 18 August. Now it appears as though Aegon Scottish Equitable will follow suit. After increasing the liquidity levels of their property fund the group are able to review the notice period introduced at the start of the year. The redemption delay, which Aegon stated could have been up to 12 months long, was applied after redemptions from the fund exceeded cash flows thus reducing the funds liquid cash balance. If the delay had not been put in place the group may have been forced sellers of their commercial property investments - harming existing investors. Now that cash levels have increased Aegon are focusing on processing sales for clients whose previous requests were denied. They will then look to lift the notice period completely if they feel the funds cash position is sufficient and that markets have stabilised.
New Star Moves International Property Fund to Bid Price Basis
New Star this week announced that large redemptions from their International Property fund had led it to move to a bid pricing basis. The funds are normally priced for sale at the offer price, therefore a move to bid pricing basis reduces the value of a unit holders investment - thus making them reluctant to redeem. We expect the move in pricing basis to be a temporary measure while New Star gets the fund's liquidity position in order.
Invesco Perpetual Strengthens Asian Equities Team
Invesco Perpetual this week announced that Tim Dickson would take up the position of Fund Manager within the group’s Asian equities team. Dickson will report to Head of Asian Equities Stuart Parks. He joins from Scottish Widows Investment Partnership (SWIP), where he was Investment Director for the GEM and Asian desks. Dickson also managed SWIP's Asian fund range. Prior to this he was Assistant Director of F&C’s Pacific Equities Desk.
FSA Fines Credit Suisse £5.6 Million
The FSA this week announced that it had fined the UK arm of Credit Suisse £5.6 million for "systems and control failings" related to the firm's incorrect pricing of asset-backed securities. In February, Credit Suisse said that it would have to re-value a number of asset-backed securities that had been mis-priced by its staff. The result was a $2.65 billion write down of revenues. The FSA said the firm had failed to adequately supervise the structured credit group and "did not act in a timely way on the concerns they had identified about the pricing of certain asset-backed positions." The regulator also cited inadequate systems and controls that permitted the incorrect valuations to remain undetected for a period of five months.
UBS: One Firm, or Three?
After another $5.1bn write-down in the second quarter of 2008 UBS have decided to reposition the bank. As a result it will move away from the "one firm" model and separate its business divisions into three autonomous units. These will be Global Wealth Management & Business Banking, Investment Banking, and Global Asset Management – all will continue to operate under the UBS brand. The bank will also align incentives for management and staff of each autonomous division directly with its financial results, while still promoting cross divisional collaboration, but the move would seem to remove many of the benefits the bank had previously promoted from the "one-firm" approach.
