Altair Asset fund's total Australian selloff questioned by experts

Altair Asset Management’s move to sell off its entire Australian portfolio of underlying shares in unit trusts citing an impending property market "calamity" and an "overvalued" equity market has been described as an over-reaction by industry executives.

Macquarie Group's former head of real estate business Bill Moss said it was overstated, while economist Saul Eslake was of the view that it was difficult to predict accurately period forecasts of collapses.

Altair’s chairman and investment officer Philip Parker said on Monday the fund had advised clients it would sell "hundreds of millions" of dollars of "underlying shares in the Altair unit trusts and then hand back the cash to those same investors". Interestingly, he has also been named a defendant in a court case brought in by his mother in an unrelated assets case involving his firm. 

“The main reason is in my opinion that there are just too many risks at present, and I cannot justify charging our clients fees when there are so many early warning lead indicators of clear and present danger in property and equity markets now,” he said. 

“I would like to make clear this is not a winding up of Altair, but a decision to hand back client monies out of equities which I deem to be far too risky at this point,” Parker said on livewiremarkets.com.

The risks he listed included the Australian East Coast ‘property bubble’ and its impending correction, China’s property and debt issues later this year, overvalued Australian markets and the unpredictable geo-political situation.

He also made it clear that Altair wasn’t being wound up, but the decision was to hand back client monies out of equities which were deemed “far too risky at this point”.

But Moss was of a different view.

"You could have said that [about China] a long time ago," Moss was cited by saying by Fairfax Media.

Australia's property was experiencing a "one-off adjustment" to yields and values because of "incredible demand" from Chinese investors, Moss said.

"I'm not convinced that it's over. From what I'm seeing, there is still a lot of strong interest from China. I would be looking for the real reason they [Altair] have pulled out," he added.

Meanwhile, Eslake said various hedge funds and economists had in the past predicted a property bust but that he had “always struggled to find credible the period forecasts that there is a collapse around the corner”. 

"Are Australian house prices and household debt high? Yes, of course they are and there are some risks that flow from that."

"But to be a 'calamity' .. you would need some things to occur that I can't see occurring anytime soon," he said.

Montgomery Asset Management funder Roger Montgomery, who knows Parker, told The Australian that his funds may not have had the flexibility to go completely to cash while continuing to manage the money, and he would not have taken the decision lightly.

“You have to give someone a lot of respect for doing that,” Montgomery said. “They are genuinely putting their clients’ interest before their own. They are not taking any fees from it.”

Amid all this, Parker is grabbing more eyeballs, with Fairfax Media reporting that he is one of the defendants named in an action stemming from claims brought by his elderly mother, Faye Mary Parker and F M Parker Pty Ltd.

Faye Mary Parker filed the suit against Attis Capital, its director David Reynolds, and Altair Assets and Pepsec, which is an entity linked to Philip Parker and Altair.