continued from page one Anne McMeehan, communications director at Autif, said: 'The role of trust...
continued from page one
Anne McMeehan, communications director at Autif, said: 'The role of trustees is clear on this as 1987 was the precursor to such actions. The fundamental line is to ensure that the price of a fund is valid.
Where markets are open but price feeds are suspect, trustees can suspend the fund.'
Difficulties arose in that some companies, due to the way in which they price the funds, had to make a decision at the start of the day, whereas others had the option to wait until mid-day before deciding, McMeehan said.
The circumstances behind last week's events were very different from those of 1987, she said.
In 1987, a storm had hit England, with many unable to get into the City. At the same time the US and UK markets had gone into a free fall. McMeehan said UK portfolios as a consequence were wholly invested and as the market fell, investors found managers were not in a position to trade.
As pricing was based on an historic basis, investors were able to second guess the market and get out at a greater value than they were entitled to, she said. Funds were suspended to protect remaining investors and that basic principle remains but today pricing is done on a forward basis so the same situation would not have arisen from the event last week, she added.
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