Portfolio liquidity impacted when investment funds access restricted
The management of portfolios that include investment funds frozen (or closed) as a consequence of financial market activity is being dealt with by our team as effectively as possible in the circumstances. The dilemma for our investor clients at the time of these events was multi-fold. They included dealing with their concern that their funds may never be realised; and secondly, without the financial resources tied up in these funds, they knew that they not be able to participate in the market recovery that would inevitably come.
Why has this happened
Investors who have a portion of their portfolio invested in some of the frozen funds (mostly mortgage and/ or income funds), or wanting to do so, have been frustrated since the government decided to provide a guarantee for deposits at ‘Banks’ – which has led to a run on other ‘cash deposit’ managers, including these particular funds.
Fund Managers have had to respond in turn by restricting further deposits; and placing restrictive conditions on redemptions – hence the reference to the fund having been ‘frozen’.
Managing client portfolios containing illiquid funds
Your Continuum Financial Planners team is monitoring each situation and forwarding recommendations to you, as to action appropriate to individual circumstances is called for by the respective fund managers.
As most of these funds continue to pay reasonable regular income – and to date have not shown any insolvency ‘threat’ – we are recommending redemption where that course of action is appropriate to individual circumstances. If you have any concerns in this regard please contact your financial planner and we will discuss the matter with you.
Managing investment funds
The experienced team at Continuum Financial Planners Pty Ltd is ready and able to assist you with your wealth management concerns – whether to deal with investment funds that have been frozen, or to deal with releasing accumulated funds to invest in a strategically targeted set of goals. To arrange a meeting with one of the team, either phone our office at 3421 3456; or complete the Contact Us form on our website. We look forward to servicing you under our mantra that – ‘ we listen, we understand; and we have solutions’ to help you achieve your longer-term financial goals.
This post was originally published in February 2009: it has occasionally been updated/ refreshed, most recently in January 2020.
