AXA NZ has suspended redemptions from its Mortgage Backed Bonds fund by institutional investors.
The fund has $229 million in funds under management and invests in first-ranking mortgages over New Zealand commercialproperties, fixed interest securities and cash.
Redemptions of bonds by wholesale customers have been suspended for three months as a precautionary measure to preserve overall fund liquidity. Income distributions will continue to be paid to all investors in the fund, both wholesale and retail.
Smaller retail investors, or Class A investors, may continue to invest or withdraw as usual. However, if withdrawals from smaller investors dramatically increase the suspension may apply to them.
AXA NZ chief executive Ralph Stewart said the fund has no arrears and has never defaulted.
"There are no property developments in the portfolio and all the buildings over which mortgages are held are established and well-tenanted. There are no related party loans.
"The reality is that this is a solid investment which has delivered attractive, consistent returns. "The fund is performing well, however we cannot ignore the market sentiment and the impact this is having on investor confidence," Mr Stewart said.
No fund manager liked suspending withdrawals, but they had a duty to take action to protect the interests of all investors.
"We are hopeful investors and their advisers will clearly consider the nature and benefit of good quality mortgage assets when making investment decisions in the current environment.
The fund's Class A bonds are for individual investors and Class C bonds are for wholesale or institutional investors.
The bonds are managed by Axa subsidiary, Mortgage Backed Bonds Ltd.
