van Eyk suspends fund redemptions
Australian research house and fund manager van Eyk has been looking to promote its Blueprint series of funds in New Zealand, however some of these were suspended yesterday.
Thursday, August 7th 2014, 10:56AM 
20 Comments
van Eyk bought the Perpetual advisory business in New Zealand and has been using those advisers to sell the Blueprint funds.
Yesterday it has announced a temporary suspension of applications and redemptions on a number of these funds, citing liquidity concerns.
It says that applications and redemptions of the Australian van Eyk Blueprint International Shares Fund (VBI) has been temporarily suspended "to protect investors’ interests."
"The temporary suspension for VBI has been imposed as a result of the market illiquidity of one of the underlying managers that VBI holds.
Contrary to our expectations, the underlying manager, Artefact Partners, elected to invest in a portfolio that was not in line with VBI’s strategy and objectives."
van Eyk appointed Artefact as a manger in July 2012.
The investment in Artefact Partners, makes up about 32% of the assets of VBI, is not “liquid” (“VBI Illiquid Investment”). Accordingly, VBI has ceased to be a liquid scheme as defined by the Australian Corporations Act.
As a result, van Eyk and Macquarie Investment Management Limited, the Responsible Entity of VBI, have determined that it is in the best interest of investors to temporarily suspend pricing, applications and redemptions.
“van Eyk is working with the responsible entity to determine how best to implement a withdrawal offer for the funds and is seeking to resolve the matter as soon as possible,” the company says.
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Comments from our readers
On 7 August 2014 at 2:59 pm Gavin Austin ABCompliance said:
I'm not sure who you are b m and why the comment - the article is May 2007 and mentions George Kerr as a minority Sydney based shareholder. The article was more about the Key Man behind the fund one Richard Boon also an ex Kiwi etc etc. What is the point of your comment? I'm sure readers of this esteemed web site would like to know. On 7 August 2014 at 8:28 pm Pragmatic said:
Thanks Gavin. I also reviewed the link & was confused. Smells like a bit of vested interest to me (sigh) On 8 August 2014 at 10:00 am btw said:
@ Gavin & Pragmatic - I don't understand your issue or reason for confusion. Kerr is a public figure of some notoriety - hence the relevance. It's evident that there's an association of some sort between Boon and Kerr - b m was merely making a (fairly obvious) observation to that effect. If you need something more recent than 2007 have a look at today's NBR which outlines in more detail the association between the two - and if you Google them you'll find much more. I don't think there's much doubt is there? Why the allegation of a vested interest? On 8 August 2014 at 2:28 pm brent sheather said:
a name change could be in order...from van eyk to van eeek ..ok no more jokes from me. On 8 August 2014 at 3:56 pm Gavin Austin ABCompliance said:
btw whoever you are-sorry -your words"It's evident that there's an association of some sort between Boon and Kerr" - you got that from b m's comments and a 2007 article? WOW - clairvoyance just took a big leap. And today's NBR wasn't published yesterday as far as I know and it was Pragmatic who raised the allegation of vested interest not I so don't relate comments to me that I didn't make please. On 8 August 2014 at 5:03 pm Clobbered said:
Hi Gavin. You may be unaware that NBR has an online paid content presence where it publishes a number of times daily a variety of news and current event articles - not all of those items appear in the printed copy that is delivered on Fridays.
Separately, truly independent research IMHO is difficult to achieve when the researcher has other related party interests such as funds management or an exchange. The perception of bias must make it difficult to sell its research - especially to independent AFAs.
On 8 August 2014 at 5:36 pm b m said:
Gavin - I wasn't intending to create flame war here, just found it interesting that several interesting players from "investments" like Epic seem to be involved here too. I'm no journalist but it looks like something interesting here to write about.
The link I showed above comes from the Artefact website. Do some googling - according to businessweek.com Kerr is a director of Artefact Partners UK.
Look at the NZ companies office register for "Artefact Holdings NZ Ltd". Check out the sole director. And check out the sole director of the shareholder.
I feel sorry for van Eyk - looks they have inherited some baggage when the bought into NZ.
Won't comment on this again - looks like lawsuits are starting to fly between Aertefact and van Eyk.
On 8 August 2014 at 10:52 pm b m said:
Actually one more comment because the dots are just way too easy to connect......
Perpetual Capital Management (owned by PGC) invests client funds in a related party fund (Artefact Partners) in July 2012.
In March 2013 Van Eyk purchase Perpetual, and PGC exit completely.
Interesting too that the Artefact Fund is not disclosed as a holding on the Blueprint fact sheet - instead it looks to be described as "S&P 500 TR AUD", quite a different beast. That may require some explanation.........
Any comment Gavin or Pragmatic?
On 9 August 2014 at 3:58 pm Gavin Austin ABCompliance said:
b m
thanks - that's more like it. Something people can actually relate to rather than just a couple of lines with an oblique ref to a rather outdated link that started all this. Yes I agree you when you make the comment that you felt sorry for van eyk picking up some unwanted baggage when they came into NZ. I am always pleased to see additional research options available in our small pool. Clobbered - yes it's difficult to get truly independent unbiased research here in our small NZ with no related party interests. It's an unfortunate issue for such a small pool we operate in. I can recall that in my early days at Securities Commission the number of times "Commissioners " had to declare their conflicts and recuse themselves from hearing matters before them. I suspect the same happens quite often at the FMA and other situations. At the end of the day we have to rely on the vast majority of professional to do this on a day to day case by case basis.
On 11 August 2014 at 9:00 am Sam Stanley said:
In response to Cobbered comment that "truly independent research is difficult to achieve when the researcher has other related party interests such as funds management or an exchange". This comment lacks any basis of truth. I assume it was pointed at FundSource which is owned by NZX. It may be your perception but I can assure you it is far from the reality. The boundaries between the funds management and fund research businesses are very clear and are never crossed. We would lose credibility in 5-minutes if this were the case. Our integrity has never been in question before on this point. FundSource has been around for 26-years while others have come and gone and we will continue to offer truly independent research to our loyal client base who rely on this independence. On 11 August 2014 at 10:32 am another AFA said:
It will be interesting to watch this unfold. A number of questions should be raised with Van Eyk:
1. Acquired Perpetual in July 2012 (and exposure to Artefact). Yet 2 years on, still holding the investment? Could we see the research report please Van Eyk?
2. Why would a reputable research company remain invested in a very small hedge fund manager ?
3. What are the underlying investments within Artefact that are causing the problem?
4. Considering the George Kerr link, is there any related party investing, or could be considered related party, such as Equity Partners (EPIC) or Torchlight?
5. Why was Artefact not disclosed in the fund fact sheet? Is this not misleading and deceptive conduct??
If I was invested in a fund exposed to Artefact, I'd ask Van Eyk for my money back under the fair trading laws and for non-disclosure. Hope they have deep pockets.
On 12 August 2014 at 4:29 pm Mike said:
"In comments to the National Business Review, Van Eyk managing director Mark Thomas strongly criticised Artefact, claiming it had invested money in an illiquid property fund with a mix of Australian listed and unlisted property assets."
What was this fund exactly. Come on let's get to the truth.
On 13 August 2014 at 12:55 pm Paul said:
For some background on Boon see
http://investmentmagazine.com.au/2008/04/getting-its-shorts-right-boosts-macquarie-backed-artefact-2/
Is it possible that this time round Artefact got the bets wrong?
On 14 August 2014 at 12:08 pm another AFA said:
The comments made by Van Eyk managing director, Mark Thomas, to the Chalkie column published yesterday are simply beyond belief! How could Van Eyk research become involved with small investment companies such as Artefact and Baker Street Capital (see Chalkie article).
Questions must be asked about related party interests and the influence of George Kerr regarding the above "investments".
Van Eyk Research, Van Eyk Advice, George Kerr, PGC, Artefact, Richard Boon, Baker Street Capital, Tourchlight, Torchlight Real Estate Fund, Perpetual Trust Mortgage and Cash Fund, and the list goes on.... these companies appear to be intertwined and one big 'money go round'. The problem is the money belongs to unsuspecting investors thinking a Research Company is acting in their best interests.
It will be interesting to see how the FMA and the Australian authorities react to the situation, and to see how effective their powers really are.
http://www.stuff.co.nz/dominion-post/business/10376605/Behind-the-freeze
On 14 August 2014 at 12:20 pm another AFA said:
To Mike, I'll take a stab and say the property fund is "Tourchlight Real Estate Fund". On 14 August 2014 at 2:12 pm Yoda said:
so what we are dealing with is a fund (Van Eyk PIE) that invested in a fund (Van Eyk Australian Unit Trust) that invested in a fund (Artefact) that in turn is invested in a fund (unlisted property fund). I am not a fan of "fund of funds" but a "fund of fund of fund of funds" is madness. 4 layers of fees and 4 layers obscuring the assets held from investors.
To "Another AFA" - thanks for the Chalkie (dominion post) link - interesting read
On 22 August 2014 at 10:40 am Hmmm said:
http://www.theaustralian.com.au/business/companies/further-strife-hits-van-eyk/story-fn91v9q3-1227031253622# quote-
THE turmoil at Sydney-based Van Eyk Research continued yesterday when its three-person asset consulting team departed without notice, and Responsible Entity Macquarie Investment Management “terminated’’ or permanently closed down four Van Eyk funds.
Investors learned on the Van Eyk website last night that the funds would be wound up and they would be paid in instalments, with the first due “within two or three weeks”.
The fund problem came to light on August 5 when Van Eyk, which was a research house but more recently diversified into funds management, warned that the Van Eyk Blueprint International Shares Fund, with just under $100 million, had made an illiquid $31m investment in the UK. The other funds are the group’s Capital Stable Fund, Balanced Fund and High Growth Fund, all of which have holdings in the illiquid find.
Long-time employee Otto Reith has stepped in to take over.
A Van Eyk spokesman could not be reached for comment.
Van Eyk has been in dispute in recent days with Artefact Partners, the UK hedge fund, which it says made the alleged illiquid investment, and alleged that Artefact exceeded its mandate. Artefact chief executive Richard Boon, a New Zealand citizen, disputed that allegation, which he said was “misleading and defamatory’’.
The product disclosure statement for the International Shares Fund says that it is almost 100 per cent invested in equities.
On 22 August 2014 at 1:43 pm Pragmatic said:
This event demonstrates the challenges in remaining an independent research house, when you're also a manager of money (assuming that there were no conflicts of interest in this particular situation). Suddenly the abilities of the gate-keeper are fully exposed as they stand shoulder to shoulder with the community whom they review
As the van Eyk events unfold, it should act as a timely reminder for those asset consultants who have a lengthy history of delivering mediocrity through their implemented consulting arrangements
On 8 September 2014 at 10:05 am Another AFA said:
More Van Eyk funds shut down, 9 in total.
The Responsible Entity, (also know as a Trustee), has moved to protect investors from rising costs and fees within the funds due to higher than anticipated redemption's. No doubt investors and Australian Financial Advisers are voting with their feet.
Is there a future for this "Researcher"?
http://www.moneymanagement.com.au/news/financial-planning/2014/more-van-eyk-funds-terminated
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