AES said one of its main concerns was about the relationship between the organisation responsible for valuing the assets of the traded life policies fund and EEA itself, and said there was a potential conflict of interest.
However, AES said the fund was primarily removed from its list of approved funds because the list aims to be as risk averse as possible and, without a forthcoming explanation from EEA, despite contacting the fund house, it felt it prudent to remove the fund while awaiting a suitable response.
According to research conducted by WL Consulting, a US-based company called ViaSource values the assets in the fund, but, as an investment adviser, also receives a share of the performance fee which is 75% of all returns above a hurdle rate of 8% per annum.
The research also alleges that the chief executive of ViaSource, Chris Daly, is a director of EEA.
EEA marketing director Peter Winders denied ViaSource valued the fund and said while, Daly is a director of the fund, he is not a director of EEA Fund Management.
Winders added that he is disappointed the fund had been removed from the approved list on the basis of a report he understands was commissioned by a competitor and which he said is “factually incorrect and arguably misleading and biased”.
“ViaSource, the fund’s US-based specialist investment adviser, does not value the fund,” said Winders.
“The fund is valued by IAG, the Guernsey-based independent administrator, using a strict valuation policy and mathematical calculation articulated clearly in the prospectus. The fund is audited by Ernst and Young to produce the annual reports and accounts, which are also available on the EEA website. It’s simply untrue to say the fund advisers also value the fund and therefore mistaken to suggest a conflict of interest.
“ViaSource’s CEO Chris Daly is not a director of EEA, the management company, but he is one of the directors of the fund. We think it’s a strength that the investment adviser is on the board of the fund because he knows so much about what’s happening on the ground in the US. Many investors find that reassuring.”