An exact figure is difficult to find as managers report on these funds in different ways, and not all of them provide up to date information.
The figure is nevertheless significant, as Abil debt became tradeable again after the curator issued new instruments in April last year. These were linked to the new ‘good bank’ that was launched at the time.
More than a year later, however, managers are still struggling to wind up these funds.
Poor liquidity
Information from the Financial Services Board (FSB) shows that, at the end of April 2017, 39 of the original 47 sidepocket funds were still open. Some of these had managed to reduce their holdings, but many had not.
The frustration for investors is that they are unable to access any money that was transferred into these sidepocket funds. No withdrawals can be made, and the fund managers are reluctant to sell the instruments as liquidity is low.
“We could dispose of them at a massive discount and give that portion back to clients, but its not what we want to do,” explains Anthony Katakuzinos, COO for retail at Stanlib. “They are however paying out interest, so people are earning a return, and we believe we can get that capital back over time.”
Taquanta’s Ray Wallace, who manages the Nedgroup Investments Core Income Abil Retention Fund, agrees.
“Demand for the new African Bank bonds is still very low,” he says. “Although a few trades have taken place on the JSE and off-market, there is still not enough trading volume in the listed or unlisted debt to allow for proper market price discovery. It would therefore be unfair to unit holders to sell all the African Bank debt at untested and deeply discounted prices.”
