Unlisted property trust investment prompts van Eyk Blueprint funds redemptions suspension
Applications and redemptions on some van Eyk Blueprint funds have been temporarily suspended "to protect investors’ interests".
The temporary suspension for the van Eyk Blueprint International Share Fund (VBI) has been imposed as a result of the market illiquidity of one of the underlying managers that VBI holds.
Van Eyk suspended applications and withdrawals from its $100 million Blueprint International Shares Fund last week, blaming so-called unauthorised investments by Artefact Partners, one of the fund's underlying asset managers since July 2012.
"Contrary to our expectations, the underlying manager, Artefact Partners, elected to invest in a portfolio that was not in line with VBI’s strategy and objectives," the contested van Eyk statement said.
"The investment in Artefact Partners, constituting approximately 32% of the assets of VBI, is not “liquid” (“VBI Illiquid Investment”). Accordingly, VBI has ceased to be a liquid scheme as defined by the Corporations Act.
"As a result, van Eyk and Macquarie Investment Management Limited, the Responsible Entity of VBI, have determined that it is in the best interest of investors to temporarily suspend pricing, applications and redemptions."
Three additional funds in the Blueprint Series, with an exposure to VBI, have also been affected by the temporary suspension. The funds are the van Eyk Blueprint Capital Stable Fund (VBC), van Eyk Blueprint Balanced Fund (VBB) and the van Eyk Blueprint High Growth Fund (VBG).
But Artefact have disputed the claim.
The head of the investment team is Richard Boon, formerly a managing director at Merrill Lynch Investment Managers and executive director of Morgan Stanley Asset Management.
Richard Boon founded Artefact Partners in 2005.
The Australian Financial Review Chanticleer columnist Tony Boyd wrote the temporary suspension of applications and redemptions on four van Eyk Blueprint funds is a "black mark" against both van Eyk, which picked the fund manager, and Macquarie Investment Management, which is the responsible entity of the funds.
Van Eyk has no excuse for allowing one of its fund managers to make investments that triggered the illiquid rules under the Corporations Act.
The temporary suspension was an automatic response by Macquarie once it was advised Artefact, which had 32% of the assets in the van Eyk Blueprint International Shares Fund, had made an investment that was not liquid.
The investment was an unlisted property trust.
But Business Day reported Boon saying "investments have always been within the guidelines of its prospectus".
Boon said comments regarding Artefact are misleading.
The VBI fund returned -1.77% over the month of March, underperforming the neutral benchmark, in the last public announcement.
It said the fund’s allocation to the BlackRock European Diversified Equity Absolute Return Fund was the key detractor from performance during the month.
The fund aims to provide capital growth over the long term and have an investment horizon of five to seven years. It was marketed as not suitable for short term investment.