WELLINGTON, Dec 10 (Reuters) - The New Zealand arm of Dutch financial group ING ING.AS plans to close four investment funds, it said on Wednesday, after their value tumbled amid the global financial crisis.
Two of the funds, the Diversified Yield and the Regular Income, were suspended in March after the United States subprime mortgage market problems, which had led to negative returns and slashed the funds’ value.
The funds were worth around NZ$521 million ($282 million) when they were suspended, but ING said that as at Nov. 30 they had funds of NZ$273.5 million.
ING said it had borrowed NZ$100 million to part pay out investors, while the funds’ assets are sold.
“The cash option that ING will be proposing is aimed at helping investors as we sell assets over an extended timeframe,” ING New Zealand’s chief executive, Helen Troup, said in a statement.
It will now recommend to the funds’ trustee and the near 8,000 investors affected that they be wound up.
ING also said it would wind up two other funds, the Credit Opportunities and Enhanced Yield, worth NZ$35 million with 710 investors.
Demand for the two funds had fallen and the downturn had resulted in illiquidity and difficulty in selling assets which could not be easily priced.
“Severe deterioration of market conditions during October and November has necessitated taking action on these two funds now to protect the interests of investors,” Troup said.
ING has more than NZ$8 billion in funds under management in New Zealand. ($1=NZ$1.85) (Reporting by Gyles Beckford; Editing by James Thornhill)