An IFA has criticised life settlements fund manager Managing Partners Limited over information it has provided on its troubled Traded Policies fund, claiming that the firm has failed to sufficiently respond to a number of requests after the fund was closed to redemptions in April.
FTAdviser sister title Investment Adviser reported in May that MPL had frozen investor redemptions on its £99.4m Traded Policies fund, due to low levels of liquidity.
The Berkshire-based IFA, who wished to remain anonymous, has five clients with £500,000 collectively invested in the Cayman Islands-based Traded Policies fund.
He told FTAdviser he has repeatedly contacted MPL for information, particularly seeking to confirm that the assets to support shareholder valuations exist and a timescale on when investors will be able to redeem their shares.
The adviser also requested information on the cash position at the time the fund was “gated”, the value of polices that have matured since then and the current cash position.
In email correspondence seen by FTAdviser dated 29 July, the firm did not offer responses to these questions which were contained in an email of 4 July. In the email it simply attached a copy of a ‘frequently asked questions’ document, which does not address any of the issues raised.
MPL has subsequently failed to respond to a further email asking the same questions, in which the adviser asked for a response by 2 August. MPL has also not filed an annual report for 2012.
FTAdviser contacted the firm directly and similarly asked whether the underlying assets support investor valuations and if there is a plan for resolution of the current liquidity crisis, including when investors would be able to redeem shares.
The firm declined to respond to the specific questions and simply referred to its publication of monthly net asset values. It also denied it had failed to engage with shareholders.
The firm said: “We are communicating with shareholders in the Traded Policies Fund and continue to publish the monthly net asset values as normal.”
The IFA said the issues with communication were heightening fears about the position of the fund.
He added that in his view an “orderly wind down” of the fund would be “the most realistic option”, criticising the firm for making no mention of this as an option in the ‘frequently asked questions’ document on the “redemption gate”.
He said: “This is causing us concern that this situation would persist because they earn management fees on the running of this fund. The Q&A makes no mention of an orderly wind down of the fund, yet this has to be the most realistic outcome for the fund.”
The adviser said MPL’s response has been in “stark contrast” to that provided by another fund manager, BlueGate, which ran an unregulated Bridging Finance fund that was similarly faced with a liquidity crisis.
He said: “We had recommended the BlueGate fund alongside MPL. After consulting with existing investors they concluded there was no long-term viability for the fund and that it was in the best interests of all concerned to carry out an orderly wind down.
“They subsequently did this, communicating clearly with all parties concerned and throughout have responded quickly to allay any concerns investors had. Monthly accounts have been provided as routine, any questions answered and all of this has resulted in calm and confidence for adviser and investor alike.”
The adviser in the news story is keen to hear from other advisers who are in the same situation. Please contact donia.o’loughlin@ft.com
