Managed Funds Australian Unity Property Growth

Hi

I agree we should do something.

I suspect that we should first make direct contact with AU and request a group meeting to discuss our grievance/s and for AU to provide an explanation for the recent unit performance.

Maybe they were overinvested in Allco/ MFS/ Record etc. That would provide explanation for the performance but still doesn't excuse the tardiness in providing updated information to the market.

Following that meeting we can then proceed, if appropriate, with considering legal options.

Of course, if AU knock back our request for a meeting that it forces our hand to consider legal options.

I think it makes sense for us all to attend that proposed meeting with AU.

I suggest that we should meet for a beer before then to prepare a list of questions, and what we require by way of solution eg reimbursement/ explanation/ apology ?.

I suggest that we post a similar thread on other similar investment forums to see if there are others with the same grievance.

Maybe a letter to the AFR/ SMH from the "AU Prop Sec Growth action group" in order to promote our proposed action to other disgruntled investors.

Even if AU don't wish to meet with us, it will make for a lively AGM (October).

I'm sure that one or maybe two of us could even be persuaded to stand for election to the Board.

Tony

 

They will probably tell you to "see what your financial adviser recommends".

Whether or not you have a financial adviser, can't see them giving you much sympathy.

I have investments with CFS, and they too have seen better days. I'm down a fair bit to what I first invested but have decided to ride it out. Time will tell whether or not I should have cut my losses and put money elsewhere.

 

Philgu, again, the argument is not the PDS or risk or nature of leveraged investments. The argument is hiding info, misinforming, and so on.

 

Discussion with AU GM

Folks here is an update for you. I have been working very hard and long behind the scenes and had a conversation with AU's GM yesterday about this crisis. Here are some highlights:

1. It seems to me AU understand they were in the wrong. I was informed that within less than a week, much information will be posted on their website. They will disclose the major holdings, formulas for calculating unit price, the major components of the growth fund explaining the sharp fluctuations, etc.
2. The fund will not change its strategy because its holdings are the same as the income fund's and this one is rated consistently 1/108.
3. As smartypants says and rightfully so, their stance is "talk to your advisor on whether to get out of the fund or remain."

My impression, and I repeat, this is my impression not knowledge, is that they have had numerous complaints and threats and this has moved them to change their attitude and strategy inasfar as reporting and disclosing info on the website. This means they have been in the wrong, but is this illegal or grounds for a lawsuit, I do not know. I believe they are trying to cover their bases and take a pre-emptive strike in case investors do sue them. It actually strenghtens our point where we can clearly show that they have not been properly disclosing info and after months and months have moved to rectify this problem. This, however, is too late for us, the investors who were misinformed and misled, stayed in, and lost 65% of our investment.

I know that the more power we have, the better it is. The only way to get power is to be organised, have proper representation, documentation, and so on. ASIC and the Pmbudsman must be brought into the picture. This is all very time-consuming and exhausting. We need to keep this in mind. And there is no guarantee of winning.

To be honest, Tony mentions apologies, etc. I frankly do not care. I want my money back. I could not care less about an apology or "teaching them a lesson." There are also other issues which are more complicated legally and this could be borderline criminal versus civil law. I do not know, but this is a big undertaking.

My thoughts now:

1. Yes, we need to organise and ascertain our strengths and weaknesses. There is strength in numbers. So, are we 10 investors or 50? Do we have $1 million invested or $50 million?
2. We need a lawfirm that agrees to represent us. This cannot happen without us having a clear, concise, and well-organised case and documentation to present to them. Then, we tell the story. We need to decide who will do this. We cannot march in 10-50 people. Yes we can choose 1-2 people to represent us investors within and between ourselves initially. I agree with that. Once we get a lawfirm, they will be the point of contact for all communications.

So, do not forget this is only one forum. By the way, there already may be action taken against AU. If so, we could jump on that train. A good solicitor will be able to check on this.

Let me know your thoughts. First step, where are we located? I am in Sydney, you?

 

Hi

Firstly let me thank oashman for the detailed update based on his discussions/ correspondence with AU.

I'm in Sydney - I invested $100k for approximately 42,000 units so you can see that I'm approx 50% or $50k down. And as mentioned previously that decrease has been since Oct.

My previous threads mention my complaint that I accept volatity in the market but I think that AU, through its Prop Sec Growth, has mislead investors through tardiness in providing recent performance/ unit price data

I believe that the tardiness to disclose has been deliberate, and if the fund had not been closed to investors at that time, would have been tantamount to fraud.

(imagine if I was advertising a fund with fantastic returns but buried in the small print said the returns were up to a period three months previous).

I agree that there has been a marked improvement in recent weeks but that does not benefit us now.

My mention of "apology" was merely to elicit a response from others. Sometimes in negotiations all people want is an "apology" - an admission of wrongdoing. I agree in this instance it is not enough.

I mention the AGM to remind ourselves that these people are accountable in a public forum, and should be exposed.

I totally support oashman in his comments, in particular that we ascertain our strength in numbers.

Regards

Tony

 

Wow

I note this morning that the unit price is down to almost $1. And that was the price at 3 March - several days ago so undoubtedly it is now under $1 and sinking fast.

Of course, no news from those morons as to what they are investing in, or what they are doing to prevent the unit price falling to .01c.

To get anything like my money back at the beginning of October the share price would now have to go up by 250%.

Tony

 

Ton, we will never get our money back. If I had faith and believed it was possible, I would invest more right now to average the price down. That is, if you paid $2 for 50,000 shares, you would have to get a 100% gain to get back your money. However, if you purchased 50,000 shares now, for $1 let's say, then you would have 100,000 shares at a cost of $1.50. Thus, you would only need a gain of 50% to recover your investment.

I personally believe the unit price will drop to less than a dollar within the week, and feel very powerless and enraged. The rest of my money is in Citibank savings growing at 8%.

We have been dooped!

 

i never knew an investment in a managed fund where you can loose more than you invest... but this maybe the first if you go down the legal side..

if you have a laywer as a central person contact he will spend the majority time on your case talking to people repeating the same information. At $200 an hour, why not just hire a secretary to do this and liase with the solicitor...

regardless your gonna need some large bucks to try and win this... why not speak to the office of fair trading first and see what they say. Consumer groups are their to help consumers...

 

Australian Unity

Is it possible that the steep decline in AU price has been caused by internal gearing? If so, there should be an equally rapid escalation of the price when the market picks up again, perhaps in a short a time a six months from now. Cheers, Paddy55.

 

This is a problem that has more to do with the regulation of the managed managed fund industry than any specific fund. The misleading figures quoted by most fund managers has been discussed on here many times and I believe was the reason behind Sim starting his own website.
AU did what they did because they have been given a licence to do so. On this issue I really don't think that we have a chance.
I am still intrigued how a fund who's assets haven't decreased, in a market where rents are rising, can possibly lose so much.
I don't recall reading anything about high gearing levels in the PDS. Or for that matter, high exposure to US property. This is what I am really annoyed about.

Quote from the PDS "The structure of the fund's growth units results in an increased exposure to the funds capital gains and loses. This 'effective' leverage magnifies the effect of gains and loses on the underlying investments"


On this matter there are no examples or figures quoted and no charts to illustrate the effects. Had such information been provided, there is no way that I would have risked my capital in this fund. It seems they would have been more honest in saying "all loses will be passed onto the growth units!
I'm on the Sunshine Coast BTW

 

Hi Oashman, thanks for getting the ball rolling on this.

I had $4000 invested now down to half, half of this was my 15 year old's hard earned money from working after school at KFC.

Maybe the way to take this forward is to organise a teleconference.
I'm happy to organise a conference number say at 7 pm tomorrow, Thursday, 6 March and people could possibly call in.

Please let me have your thoughts.

 

Should I take my money and run ?

Know I may have asked this question before ...but would appreciate your feedback ... should I get ouf of AU now having lost 50% of my capital or
should I continue to hold and put in regular amounts of $200 pm to lower
the cost of the units previously purchased.

I've called them again this arvo ...and waiting for a fund manager to return
my call.

Thanks.

 

Yes Sim, you're right 94% listed property securities in the PDS.
So that's the answer, they're being hammered by poor market sentiment in the sector. They could even be the victims of hedge funds short selling.
Whether or not they are heavily geared or exposed to subprime, everyone in the sector seems to suffer.
So I suppose there's a glimmer of hope that they could rise quite significantly once sentiment improves, assuming of course they're not caught up in the credit crunch.
For me selling down now would have such a small effect on my LVR that it wouldn't be worth the effort.
I'm looking on them now as potentially great growth funds for the future.

 

Save the new cash in the bank - you'll get at least 7%.

 

Never average down!!.
By doing just that, you average a loss.
Nick Leeson did just that, and he managed to destroy a bank.

 

Conference Call

Hi CherryPro - thanks for the offer. I think a call would be a good idea. could you basically post us a number to call and we would all dial in tomorrow arvo? Let's see how many call in and get the ball rolling.
I understand the fund invests in LPTs and shares on ASX, and yes, market is down. But take a look at the fund's ordinary units. They are down 15-20%, we have a multiplier effect loss of X3= 60%. Again, the point is that all this was not fully disclosed in advance and in the market updates which were nearly 3 months trailing behind, giving misleading quotes, and so on.
As for legal costs, I believe it could be possible to get a firm on a contingency basis. Yes, I also said we need to first contact the Ombudsman, but I would like to do this in an organised, structured fashioned with many investors collaborating. There is strength in numbers.

As for selling or staying in hoping for sharp rises in the future. I have learned years ago, this is not the right way, at least for me. In the sharp falls of 1999-2000 in the USA, I was heavily invested in Janus funds, all said I should stay in, and I listened to the so-called financial advisors/experts. 8 years later, those funds are still in the negative, I have yet to recover those funds. I think 8 years is long-term, long enough. The lesson for me is that once a fund loses more than 50%, it is highly unlikely to recover in the future, at least 10 years or more. I could be wrong and there are always exceptions, but again, you are expecting the AU fund to have growth of 150%, this is very very unlikely. The market is bad and will remain so for at least 2-3 years. The sub-prime crisis in the USA is far far from over. It is likely to continue brining our markets down for a while.

Awaiting conference call info and outcomes.

 

Never say never. Just because it did not work for Leeson, does not mean it won't work for others. He averaged down in a horrid market, no one could be bailed out of this crisis. But in favourable markets, it does pay to average down, I have done it many times successfully. As I said, I am not doing it this time not because of the market, but because I have ZERO faith in AU and I do not want any additional units in this poorly managed fund.

 

"....it does pay to average down, I have done it many times successfully"

Some people are lucky.

Horrid market has nothing to do with N.L losses.

“Leeson's main assignment was to arbitrage
between SIMEX and the exchanges in Japan and try to capitalize on small price differences between the futures contracts.
In reality, however, he was taking massive speculative positions, financing SIMEX’ margin requirements by selling options and borrowing huge amounts of money from Barings’ head office in London. By the end of February 1995, the losses had become too large and Barings bank went bankrupt".