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Bendigo subsidiary to wind up fund
Asset-backed yield trust to be closed

By Wouter Klijn
Wed 07 Apr 2010
A Bendigo subsidiary has proposed closing an asset-backed yield trust.




Adelaide Managed Funds (AMF), a wholly-owned subsidiary of Bendigo and Adelaide Bank, will seek unitholder approval to wind up the AMF asset-backed yield trust, a publicly-listed managed investment scheme (MIS) that invests in asset-backed securities.

In a statement, AMF said it intends to implement an orderly wind-up of the fund by returning capital to unitholders as its underlying assets mature.

After a strategic review, AMF's board concluded that in the absence of a superior proposal or a favourable change in market conditions a wind-up would be in the best interests of unitholders.

The wind-up came as the fund continues to trade at a discount to its net tangible asset backing. A substantial amount of the assets will reach maturity over the next six to 18 months.

The fund had $170 million in assets under management as at the end of 2009 and invested in margin loans, medical financing, non-conforming mortgages and MIS investor loans.

It had an exposure of $21 million to investment schemes provided by collapsed agribusiness Great Southern.

AMF took a provision of $16.6 million in February 2010, which reflected the company's "best estimate of loss" as a result of defaulting borrowers in Great Southern investment schemes.

AMF said it will not look to make any new investments and its on-market buy-back program of units will be stopped.