INVESTMENT
FUNDS -
SUSPENSION OF DEALING UPDATE
AUTIF
has noted with both disappointment and concern one or two
references in the press over recent days that have
incorrectly implied that some UK mutual fund managers have
chosen not to permit transactions in one or more of their
funds in an effort to stem a potential selling epidemic.
FSA
regulations stipulate that managers can only suspend dealing
in a fund if they have "good and sufficient reason
to do so having regard to the interests of participants or
potential participants".
Furthermore, they can only do so with the prior
agreement of the fund’s independent trustee, (or
depositary for open-ended investment companies). To prevent
people from buying and selling units/shares would therefore
not be sufficient reason to suspend dealing.
It is the
regulations that state that managers may only deal at prices
based on the net asset value of the fund.
If they are not satisfied that those prices can be
calculated using reliable price data for the underlying
assets, it is absolutely right that managers should refrain
from doing so in order to protect the best interests of all
unitholders/shareholders, whether wishing to buy, sell or
retain their holdings.
If a fund is
suspended, it is with the full agreement of the independent
trustee/depositary and the FSA must be immediately informed.
Similarly, the FSA must be informed when the
suspension is lifted.
Investment
trusts, which have been able to continue to trade, are
quoted companies in their own right and
are different in that trading in their shares takes place
between buyers and sellers on the stock market and does not
lead to a consequent need to buy or sell securities in the
underlying portfolio.
The routine periodic publication of net asset values
for investment trusts, (usually daily or weekly), is for
market information purposes only.
Anne
McMeehan, Director of Communications stated:
“We
have received no indication from any of our member companies
that they are experiencing any panic amongst their unit and
shareholders. On
the contrary, investors and their advisers are remaining
calm and resilient.”
Ends
