Managed Funds Australian Unity Property Growth

Hi

Investors might want to commiserate me: Twelve months ago I invested $100k in the Property Growth fund.

The returns, and relative performance against its peers, speak for itself.

AU Sector Relative Ranking
1 Month -15.19 -6.60 -7.88 117/117
3 Month -24.75 -9.94 -11.12 117/117
1 Year -20.97 -10.54 -12.01 115/115

I somehow managed to pick the the worst, most incompetent fund managers, (117/117) in the sector.

Tony

 

What was your reason for picking AU?

I suspect becuase their previous high returns? I always said I would not invest into one hit wonders who show a large abnormal return one year.. as it shows the fund is taking large risks and is able to drop by the same amount it went up.

However I'm also burnt with UBS property and global property funds.. so I'm also feeling your pain

All I can say is learn from your mistake.. find out why you made it, and don't do it again!

 

hmmm, it was the best the year before... wonder why you picked it....

plenty of discussion about it around the forum... yesterdays winner = todays loser

however put it in context, the LPT sector is down about 22% over 12 months so in narva speak its beating the index... the sad thing is it was even on the 11 december (who says index cant go sour very quickly...)

 

Hi

The irony is that I selected AU Prop Sec Growth on the basis of its record, both absolute returns and relative to other funds in the same sector.

However I now realise that AU had delayed the results by several months so that latest published returns in, for example October 2007, was still showing an excellent performance, albeit based on returns up to end of August.

Misleading, and not all together ethical or honest. Of course during the time from July the fund was closed to new investors but without explanation - we now know why.

Tony

 

AU Property Growth - Fraud?

Hello folks,
Like many of you, I am too, a victim to the AU Prop Growth fund rapid decline. Although the LPT has declined, this particular fund has dropped to nearly $1.00 and this is unacceptable. More than that, their constant failure to update and list information whether on the site, by email, or direct mail is downright criminal. And finally, for months, inclduing most of Nov, Dec, and even Jan, their reports were showing PROFITS/GAINS, not losses. This is fraud and I had contacted them on this issue several times. They did call me back and tried to make excuses (it took them 6 weeks to get back to me) and they never really gave me an explanation how they are working to recover our huge losses. They also could not explain why their reporting is 3 months behind and why their is lack of information, communication, why the fund was suddenly closed and then re-opened. I think this is very serious, and while other LPTs have made losses, none come close to this fund's crash. It cannot be all attributed to Centro holdings and also that ridiculous 41 cents distribution last year. I asked what are the managers to minimise the losses, why are they not selling everything given the dismal market and putting our hard-earned cash in simple bonds and term deposits. I would be happy with 6-7% positive returns versus 50-70% losses. I am now getting ready to submit complaints to ASIC and Ombudsman. I would like to know who else thinks this is warranted, and perhaps even go for a class-action suit.

Thanks

 

Hi

Excellent idea - include me in on this.

Your email matched my experience exactly. I put $100k in early last year after making all reasonable enquires. What I did not appreciate was that the published information eg returns/ ratings - were several months old.

I think in an early thread of mine - I have whinged about this issue several times - I mentioned how up to November the AU website, and external commentators, were publishing figures showing excellent returns for the past 3 months/ 6 months/ 1 year/ 3 year.

Suddenly I'm 25% down - OK - the market dropped but that doesn't explain the delay in publishing recent figures, or for that matter why AU Prop Sec Growth has recently been rated the worst - 119/119 - of all fund managers.

I'm sure Slater & Gordon will provide an initial free consultation and advise us of our prospects, alternatively we find someone on a "no win - no fee basis", noting that such solicitors will charge a largish fee (not that it worries us).

Absolutely useless in media management, and in investment management.

Tony

 

Tony:
This is a no-brainer. I was involved with a huge class-action against JANUS, one of the largest fund managers in the USA. The laws are very clear. I owned dozens of managed funds for years, no one behaved like AU. They are unclear, avoidant, slow, and quite devious, if you ask me. The time to act is now. I remember they did not release a market update until late Jan-early Feb, and all info on their site was still showing huge gains even in Jan 08. This is unethical at best, illegal at worst. At the very least, as active managers, they should have made some defensive moves given the market trends. They did nothing and continue to do nothing. The last 4 days have seen gains in the market of around 5% yet the unit price actually dropped. I don't know what they are doing but it is time the records are opened for scrutiny. Moreover, it is high time they stop charging any management fees until they start managing this fund properly, openly, and professionally. They have fooled us for long enough. I wish there was a simple way to gather all investors interested and begin action immediately and without further delay.

 

Hi

I agree that we should act.

I presume that other previous contributors to this thread will have received an email notifying them of your recent post.

So maybe we leave a few days to see if there is any interest.

Alternatively maybe Sim the administrator can suggest how we proceed in contacting the other previously expressed disgrunted investors.

Tony

 

OK. Meanwhile to get some milestones in the process I will proceed with ASIC and the Ombudsman. The more paperwork, the better it is later on.

 

I'm on this with you guys. Small amounts but their response has been
pathetic. Count me in....what do you want me to do ?

Thanks.

 

Same complaints and same experiences as you guys. My original 100k is now worth 40K.
I too would love to know why they paid out such a large distribution last year when the fund was performing so poorly. And why is it performing so poorly? some have said that the Centro exposure was small. Their communication has been appalling, perhaps they are too embarrassed to give an explanation, or perhaps they are simply not required to.
Their performance statistics have been misleading, but I have noticed the same with other funds. My Macquarie Property Income fund is performing even worse, down 65% the last time I looked, so that's another 100K down the drain for me. But if you looked at their website up until a couple of months ago, you would think that the fund was still performing well.
I would love to think that we could take a class action against them and get some compensation, however I am very sceptical that we would get anywhere due to that little disclaimer in the PDS that says you could lose your capital.
I'll back you all every step of the way if you think we stand a chance, however I must say that I can't possibly risk losing anymore on a potentially fruitless legal case

 

why would you invest so much into such a fund anyway? One year they were up 60%, so doesn't this suggest to you it could fall 60%?

To me sounds like greed took hold, and now you lost. I for one wouldn't invest into a 1 hit wonder like Australian Unity or the Macquarie fund.. sounds like you simply based your decision to invest on 1 stella year they had.. which really isn't sufficient reason to invest.

 

You've made this point before and it really isn't very helpful.
As for greed, well I suppose you invest your money to make as little as possible do you?
Like many I suppose, I invested in a sector that I thought would give a fairly stable return over a prolonged period. I then sought the best performing funds within that sector from reputable managers, having first studied the PDS of each fund. in some detail.

 

Greed?

crc_error, I fail to see what greed has to do with this.
lorrimer, I fail to see the correlation with the PDS.

Yes, you stand to gain or lose when investing in a fund, no argument. However, this is not our complaint against AU. The complaint is that they were misleading, did not disclose information, failed to properly make sound investments and protect our capital, did not advertise true and timely figures regarding fund performance, and the list goes on. Just because legally they disclose investors can lose their money, does not mean they can do whatever they want without any consequences. They are still bound by laws and regulations set forth by ASIC and other regulatory bodies. Plain and simple. My position is that they did not follow proper procedure, intentionally misled investors, and so on. You know, about 7 weeks ago I had a conference call with these guys, 3-4 of their top managers, and I laid my complaints to them. I simply said: "right now, I want you to sell everything and put all the funds in an 8%+ certificate of deposit. That is what I did with my money and other funds I held. I got out, and I am so happy. Why don't you at AU do the same? You charge us management fees, yet you sit by while our money evaporates!" -- if a low-life like me could read the signs on the wall, why did they not? They are the seasoned, experienced, well-paid managers. It is their job to stay on top of it. Centro cannot be blamed for this, certainly it would cause a loss but not a 60% loss to an entire fund. Moreover, if you look at the sister funds, the income and the ordinary, you would see they are doing very well, relatively speaking. I suspect we, the "growth" fund absorbed all their losses. AU are promoting those 2 funds and release figures for them while "growth" fund is simply disappearing and I suspect it will close at some point in the future. I want someone completely independent to scrutinize their files and actions over the past 6 months. It's that simple. The guys at AU also told me that in the last 2 months, millions of dollars were transferred from the growth to the income/ordinary funds. Thus, the growth fund has shrunk to less than a 1/3 of its size.

I suggest posters here stop lecturing others about greed and gains in past years, this is irrelevant to the matter at hand. This is a managed fund not a stock in a company. If it were a stock, then I agree you could only blame the investors. But a managed fund is supposed to be "managed" hence, the fault and responsibility falls on the MANAGERS who are supposed to manage, inform, monitor, and so on.

 

Oh, by the way, lorrimer, not to make you feel worse, but...in absolute terms, your 100k is actually worth less than 40k. That is, if you had the 100k for this 1 year in a certificate of deposit at 8% or more (like Rabo, ING, and other banks are offering), you would have made $8000 or so, thus your loss is $68,000. I am kicking myself for not getting out 7 weeks ago with a relatively 'small loss' of 20%, that would have been the best. In my worst nightmares I did not imagine it would drop another 40%. I believed the managers are actively managing my money and moving it to safer, more solid investment instruments. Even bonds would be good at this stage.

 

Take a look how well the sister funds are doing, though this is as of 31/1, it is still indicative. Look at the ranking as well.

Income Fund
Trailing Total Returns as at 31 Jan 2008
Total
Return +/-
Cat +/-
Index Cat
Rank
1 Month -1.93 NAv NAv 1/108
3 Month -6.17 18.84 18.66 1/108
1 Year -1.73 22.35 21.26 1/106
3 Year 7.40 3.08 1.69 7/85

Ordinary
Trailing Total Returns as at 31 Jan 2008
Total
Return +/-
Cat +/-
Index Cat
Rank
1 Month -11.93 NAv NAv 19/108
3 Month -23.99 1.02 0.84 32/108
1 Year -22.51 1.57 0.48 31/106
3 Year 4.82 0.50 -0.89 24/85

Now look at the GROWTH
Trailing Total Returns as at 31 Jan 2008
Total
Return +/-
Cat +/-
Index Cat
Rank
1 Month -26.70 NAv NAv 108/108
3 Month -44.54 -19.53 -19.71 108/108
1 Year -44.50 -20.42 -21.51 106/106
3 Year 1.28 -3.04 -4.43 79/85

Consistently the lowest ranked. Highest losses. Very peculiar is it not, given that all 3 funds are invested in the same shares. The growth just absorbs all the losses, the income losses nothing but gets all the income and distributions. However, for some reason, we were hit with a HUGE distribution, and a HUGE loss. This is out of balance. My accountant looked at the tax statement and said that in 30 years of practicing as a CPA he has never seen such a poorly managed/structured fund.

 

Exactly right! And this is the point we are making in considering action against AU. When information is manipulated and concealed and fund managers are not acting in investors' best interests, that is when legal action is warranted.

 

Hi

Wow - this thread has certainly built up momentum in the past 48 hours.

Today I came across my last statement from AU.

At 1 Oct the unit price was $2.4526 (and I was breaking even).

By 30 December the unit price was $1.8463. I was now $22k down on my original investment.

The unit price recently hovered around $1.18. Ouch !!

That is some dramatic drop, and I agree with others that it merits investigation.

Somehow I don't think it passes the "sniff test", particularly noting the absence of timely information (would they have been so slow to publish latest figures if the unit prices had risen as much - obviously not).

Tony

 

Precisely. The question is how to proceed. I was promised they would get back to me with answers next werk, but I doubt they will. If they do, I don't think I will be satisfied at all. It is now time to move forward with seeking legal advice. I am happy to be the lead on this with others' support of course. I can draft something and communicate with several firms.