News Round Up: April 16

Activity opportunity abounds in global fixed interest; Frozen fund to be split; FMA wants exemption submissions.

Monday, April 16th 2012, 7:01AM

Giant fixed interest manager PIMCO says it sees a prolonged correction phase of low growth, low interest rates and substantial volatility in markets.

PIMCO Australia’s New Zealand manager Tony Hildyard says the markets are in a period where “active opportunity abounds but where the risk of a sovereign default remains a real possibility.”
In reviewing recent activity PIMCO says: “Markets remained very volatile vacillating between periods of "risk on" and "risk off" trading as US growth surprised on the upside and progress appeared to be made in resolving the European crisis.”

“However, as the quarter progressed it became evident that the eurphoria in markets was overdone and structural impediments remained. That there was no short-term fix for the ongoing global delevering required and caution returned to markets.”

Frozen fund to be split
Investors in LM Investments frozen funds are are to be presented with a proposal to split the fund in two.

Investors are being asked to vote on May 16 whether the manager LM Investment Management can split the First Mortgage Income Fund, which at the end of June owned $A383 million ($483m) of loans to Australian property developers, into two separate pools of assets, dividing it between those who want their money back and those willing to hold on in the hopes of a lift in the property market.

The fund has been frozen since March 2009.

FMA seeks submissions on exemption reviews
The Financial Markets Authority (FMA) is seeking submissions from advisers, investors and market participants on a review of 44 class exemption notices due to expire later this year.

The FMA is able to grant exemptions from provisions of various securities laws, removing the rigidities in the law and ensure standards set for market participants are reasonable and cost effective.

They provide relief where the costs of compliance are not matched by improved outcomes for investors or market participants.

As part of the review process FMA is calling for submissions from all interested parties on their experience with the notices, and proposals on whether, and if so how, the exemptions should be renewed consistently with FMA's regulatory objectives.

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