Seven Investment Management has suspended a pair of funds with links to a defunct Guernsey bond fund over growing liquidity concerns.
The DFM alerted shareholders earlier this month that it would be suspending dealing in the £33m 7IM Absolute Return Portfolio and the £20m Income Portfolio until further notice.
The funds, which were inherited from Tcam following its acquisition by 7IM in 2018, have “material exposures to two illiquid holdings neither of which can currently be sold”.
The level of illiquidity in the 7IM Absolute Return Portfolio is currently 16.3% and 15.7% for the Income Portfolio.
Funds have hefty exposure to Xenfin Securitised Debt
There is a degree of crossover in the funds’ fixed income portion with both holding positions in the Bluebay Financial Capital Bond fund and TwentyFour Monument Bond fund.
But the biggest overlap between the two is their hefty weightings in Xenfin Securitised Debt which has been in liquidation since October 2019. According to the funds’ February factsheet the defunct fund made up 9.3% of the Income Portfolio and 11.1% of the Absolute Return Portfolio.
Xenfin Securitised Debt was suspended from the Guernsey based International Stock Exchange in July 2019. Months later the fund’s administrator GFG Funds PCC wrote to shareholders to inform them the collectivised investment scheme would be wound-up.
GFG Funds’ parent company GFG Limited went belly up itself in December that year. It has no apparent link to steel magnate Sanjeev Gupta’s GFG Alliance which is on the brink of collapse.
7IM keeps quiet on defunct bond fund
7IM would not comment on the funds’ exposure to Xenfin Securitised Debt when approached by Portfolio Adviser.
The DFM said while it does not anticipate “significant outflows” from the Absolute Return Portfolio and Income Portfolio there was a risk that redemptions during the course of business coupled with the liquidity challenges could result in “unacceptable levels of illiquidity”.
“In light of this, 7IM decided that a fund suspension was necessary to protect the interests of all investors. The options to resolve the suspension will continue to be evaluated.
“The suspended funds represent approximately £53m combined and 7IM continues to act in the best interests of investors as it does for the entire £18.5bn of client assets it is privileged to manage on behalf of its clients and investors. ”
