In a nondescript letter dated April 7, Absa informed investors in its Absa Money Market Fund (AMMF) that it is closing down the fund worth R75.47 billion.
Absa said the unit trust fund, which has been operating since 1997, would be wound up in terms of Section 102 of the Collective Investment Schemes Control Act and be closed on July 6.
The bank gave no reason for why it opted to close the fund down but hinted that some of its investors might have been using it as a bank account – something it was not meant to be used as.
The letter reads:
7 April 2021
Absa Money Market Fund Closure
Absa is committed to providing all of our customers with the best experience and financial products. To this end, we regularly assess all our products to ensure that they are aligned to our customers’ needs and expectations.
Absa Fund Managers recently reviewed the Absa Money Market Fund (AMMF) and established that the majority of the retail client population sampled, believe that the AMMF capital and its associated returns are guaranteed by Absa Bank. However, the AMMF is not a bank account – it is a collective investment schemes product (also known as a “unit trust”) and therefore capital and returns are not guaranteed. We have therefore decided to close the AMMF as of 6 July 2021 (the closure date), in the best interest of our clients, and given our findings that the majority of retail clients believe that their capital and returns are guaranteed.
The closure is a winding-up process, which in terms of Section 102 of the Collective Investment Schemes Control Act, requires the selling of your share of the fund and paying the proceeds to you. We will therefore, as part of this process, pay out your funds in the AMMF to you, on or before the closure date.
As an investor in the AMMF you can switch at any time, with the cut-off date for switching being 1 July 2021 and the wind-up date being 6 July 2021.
Therefore, you now have 90 days from the date of this letter within which to:
– withdraw your funds directly into one of your bank accounts, or
– speak to a financial advisor should you wish to easily switch your funds to any of our other financial products, or
– after 90 days, conveniently and safely be transferred to an Absa investment bank account in your name, the details of which are outlined below:
Absa investment bank account
• Your account number will remain the same.
• We will seamlessly transfer your AMMF investment to ensure uninterrupted returns.
• The interest rate on this investment bank account is currently 4.5%* p.a. which is equivalent or better than what you are currently receiving from your AMMF investment.
• All Absa bank accounts are guaranteed by Absa.
• When you access this account, your current Absa card will continue to work as before.
• You can also still transact on your account through Absa branches, Online Banking and ATMs using your current card.
Due to the Covid-19 pandemic, we recommend the use of any of our digital channels detailed below to communicate your choice. We are on standby through our various channels to provide any assistance you may require during this time, including financial advice.
Please do not hesitate to:
• Visit our web site https://www.absa.co.za/mmfclosure.
• Log onto Online Banking or the Absa Mobile App to make your choice.
• Visit your nearest branch to discuss your options with your banker or financial advisor.
• Call us directly on 0860 111 515.