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ACR in administration

Discussion in 'Finance & Banking' started by Simon Hampel, 29th May, 2007.

  1. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Looks like another mortgage debenture company has gone the way of the Dodo ... Australian Capital Reserve - you probably remember ACR from all the TV adverts they did.

    Interestingly, I did a quick Google and found that ASIC had already stopped them from marketing their products more than 2 years ago ... alarm bells should have been going off then. Australian Securities and Investments Commission - 2005 media releases - 05-30 ASIC action protects vulnerable investors in high-yield debentures

    And from InfoChoice:

     
  2. Nigel Ward

    Nigel Ward Team InvestEd

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    Nearly two years ago InvestEd noted that these debentures were questionable investments.

    http://www.invested.com.au/79/debenture-stocks-113/?highlight=debenture#post496

    The real tragedy is that there'll be lots of retirees who were just after a little bit of income above bank deposit rates who'll now lose their retirement nest egg. They probably thought they were being conservative and were safely stowing their money in mortgage and property backed investments...

    With a bit of financial education they could have earned a far higher return with much lower risk investing in an income fund like NavraInvest. Or even just stowing their cash in 5-10 blue chip dividend paying shares like the banks...

    * sigh * :( It really makes me sad when people get burned like this due to lack of financial education.


    N.
     
  3. Smartypants

    Smartypants Well-Known Member

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    Makes me sad too.

    Might be just me, but I feel that the way this company was marketed made it look like a government company that possibly could have made intending investors feel comfortable about handing over their hard earned.

    Bad news all round.
     
  4. Steve

    Steve Well-Known Member

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    I just re-read the post you wrote about debentures. I encourage everyone to do the same. It is very easy to understand and by the end of it you will know why you should be cautious about investing in debentures.

    Thankyou Nigel.:)

    Cheers,

    Steve
     
  5. bundy1964

    bundy1964 Well-Known Member

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    I much prefer the listed hybrid securites, the fact you can leverage them heavily also helps :D
     
  6. Simon Hampel

    Simon Hampel Co-founder Staff Member

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  7. Liverpool St

    Liverpool St Well-Known Member

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    ACR


    I was talking to a representative from ASIC and one "investor" that lost $800K in the ACR collapse said that he thought it was a term deposit and "secured" by property. I suppose some one should ask...How safe is Navra retail/wholesale funds????
    Anyone help
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    This has been covered a few times before (I think every time something like ACR happens, this question gets asked).

    Navra funds are just like every other managed fund (and very different to debentures). There are strict rules about how managed funds are operated - and the fees paid are quite transparent.

    The investments Navra make are all very large cap, very liquid, listed shares on the ASX200, and as such there is very little chance of you losing all of your money.

    That said, there is also no guarantee that your original capital investment will be preserved ... it is quite possible for those shares to go down in value and thus see you facing a paper loss ... but you would be extremely unlikely to lose ALL of your money like the people who invested in ACR or other such products might.
     
  9. Nigel Ward

    Nigel Ward Team InvestEd

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    It's completely different. As I understand it, funds invested with NI are held by the custodian, a subsidiary of Royal Bank of Canada.

    The funds are invested in financially strong blue chip companies listed on the ASX. Not in some dodgy development finance deal...

    There's no guaranteed return with NI. You get what performance the relevant shares plus their proprietary trading can generate. With ACR style investments you're buying notes issued by a special purpose finance company (read $2 company) that pays you 8% say and onlends to a developer who pays them 16% for example.

    NI is a responsible entity holding an Australian Financial Services Licence. Some of the debenture issuing companies got away with what they did because debentures are excluded from the definition of financial product and thus aren't regulated...

    There's just no comparison!!!!
     
  10. Liverpool St

    Liverpool St Well-Known Member

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    ACR


    Hey, thanks gang
     
  11. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    More news about ACR ... seems like they may be able to salvage something for investors ... provided that the property valuations stack up.

    http://www.invested.com.au/gallery/showphoto.php?photo=141

    Interestingly, it looks like the administrators are going to attempt to complete any unfinished projects to realise their full value ... I guess that makes sense - I would imagine that a half finished project is worth relatively little - especially given the risks involved in taking over someone else's failed development.
     
  12. FrankGrimes

    FrankGrimes Well-Known Member

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    Its terrible. I saw one bloke on the news who had $880,000 invested from an insurance payout (he is wheelchair bound from the accident).

    Very very sad....... People really need to spend the time and energy understanding investing and money.. And if you don't, AT LEAST see a few financial planners

    ... Makes me cringe
     
  13. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Comments from ABC's Inside Business:

    Transcript: Inside Business - 03/06/2007: Kohler on regulating property financiers

    Video: Inside Business - 03-Jun-2007
     
  14. Nigel Ward

    Nigel Ward Team InvestEd

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    You've hit the nail right on the head Frank. Some of those ACR investors would be in the "all financial planners are shonks" category or the "I'm too tight to pay a couple of grand for advice" camp. What would some good advice cost them? It looks like the price of the lesson could be in the hundreds of thousands for some. A case of penny-wise pound foolish for some.
     
  15. bundy1964

    bundy1964 Well-Known Member

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    Taken from Yahoo Finance.

    Anyone that advises that people put all their eggs in one risky basket should be retired from advising anyone! I know when I did the visit to the bank manager, financial planer and private banker, the financial planer advised against me having a 80% holding in 1 fund as it was not diversified enough to cover his rear. Still hold the fund but it is around 10% of the portfolio.