Are your clients unhappy with a poorly performing investment manager? Your role is to engage with the fund manager and, if necessary, remove the management team.
According to Denison Funds Management, financial advisers are key to turning around underperforming funds and play a crucial role in holding fund managers accountable to their investors.
However Denison does have a vested interest as it hopes to take over the running of the 360 Capital Industrial Fund after being approached by a group of investors, representing 9.2 per cent of issued capital, to eject the existing management team and responsible entity.
360° of confusion
The specialist real-estate-fund manager recently hosted a national roadshow where they met with approximately 300 investors.
Denison Funds Management chief executive, Matthew Burrows, said that while the vast majority of those present at the roadshows wanted a change in management, many were unsure of how they should vote and what their rights were as investors.
“Most investors were concerned with the recent move by 360 to change the constitution of the fund, which has been ruled as in breach of the Corporations Act,” he said.
“They are also concerned that listing the fund at this time will have a serious negative impact on the value of the fund. However, many investors said the information sent by 360 was confusing. In particular, the proxy-voting form is ambiguous in terms of the treatment of votes from abstaining investors.”
Make no assumptions
Burrows added that dialogue with advisers was crucial at times like this to ensure investors’ interests were protected.
“Advisers need to speak with their clients to help them decide what the best course of action for their circumstances is,” he said.
“Too often in the finance industry we assume a level of engagement or knowledge from investors that they simply don’t have. Most investors simply want a good return and their advisers can help them set the course to achieving that.”
Resist the list
According to a letter from the group of investors requesting the change, unitholders listed the dilution of their investments, changes to the constitution and 360 Capital’s plan to list the fund on the ASX as their major concerns.
A unitholder meeting to vote on the proposed change of responsible entity will be held at 10am on September 17 at Oaks on Collins, 480 Collins Street, Melbourne.
Neither side in this transaction is without blemish! Both have proposed solutions, “In the unit holders interests” that give themselves a greater benefit. Both are claiming the high moral ground while standing to gain significantly.
The problem for the average investor is that the fund is frozen. What they would most like to do is just get out and leave these sharpe operators to their own shenanigans but they are stuck.
What is really needed is a regulator with some guts that will actually oversee the interests of the unit holders as a whole.
How can the cost of the legal battles entered into by these parties but paid for by the unit holders be in their interests when what is at steak is plainly a grab for power