After nearly two years, investors in the MET Global Diversified Feeder Fund will finally be able to access their money. This was one of the funds caught up in the allegations around Cobus Kellermann and David Cosgrove.
MET Collective Investments applied to the Financial Services Board (FSB) in June 2015 to have all repurchases from the portfolio suspended, following actions taken by the Guernsey Financial Services Commission (GFSC). However, MET Collective Investments confirmed this week that money will soon be available for distribution to investors, subject to the company’s normal operational, legal and regulatory requirements.
At June 3 2015, the portfolio’s net asset value was R224 836 614.40 and MET Collective Investments is currently in the process of calculating the growth on this amount after all costs have been taken into account. The company told Moneyweb that it is confident that investors will receive capital growth on their investments of about 10% over the period.
The MET Global Diversified Feeder Fund invested into the Armstrong Global Diversified Fund, a unit trust structure housed in the Trinity Global Fund in Guernsey. This was one of four mutual fund companies in Guernsey with links to Cosgrove and Kellermann that drew scrutiny in early 2015.
The Armstrong Global Diversified Fund was placed in liquidation and some of the money had already become available last year. Last week, the trustees in Guernsey, Royal Bank of Canada (RBC), confirmed that the GFSC had given clearance to release the remainder.
“We have kept constant contact with the liquidators and trustees in Guernsey during this process,” MET Collective Investments’ CEO Etienne Gouws told Moneyweb. “On Thursday last week, the trustees notified us that regulatory approval was received and they will be making the hard currency proceeds available.”
The good news for investors is that no capital losses have been suffered. Despite the effects of the costs of liquidation and exchange rate movements, the net asset value being paid out is higher than it was when the portfolio was suspended.
MET Collective Investments did continue to charge a management fee during this period, as it continued to be responsible for oversight and facilitating the successful retrieval of the money for investors. The company also incurred costs itself, such as direct legal fees of £24 577.50 for the period.
“Investors are not bearing any additional costs over and above the MET Collective Investments management fee and other associated fees,” Gouws explained. “We have been asked why we continued to charge management fees, but while we were not actively managing the portfolio, it was still under our license and we were still ultimately responsible for it. It was an ongoing risk for the company.”
While investors can rightly question why the whole process has taken so long, Gouws says that he remains confident that the regulators involved were acting in what they deemed to be the best interests of investors. The process was also outside of the control of anyone in South Africa.
“The main delay was caused by the regulatory and legal process in Guernsey,” Gouws explained. “It took many interactions, follow-ups and briefing of legal counsel in Guernsey before the first 87% was released by RBC. Due to various further events happening in Guernsey, the disinvestment of the remaining portfolios was delayed. All of this was not within the control of MET Collective Investments or the South African regulator.”