More mortgage funds 'on hold'

A raft of mortgage funds have been put ‘on hold’ by research house Standard & Poor’s (S&) in the wake of mass redemption freezes across the sector.

The latest funds to be put ‘on hold’ by the research house are three APN property income funds, ING’s mortgage funds, the MacarthurCook Mortgage Fund, two of Advance’s mortgage funds and 13 Colonial First State mortgage funds.

S&P has placed two Advance mortgage funds on hold as the group joined others in changing their withdrawal process. Distributions from Advance’s previously three star-rated product will continue.

Colonial First State’s 13 mortgage funds previously held a range of ratings, between two and four stars, but yesterday put a freeze on redemptions, leading to the ratings changes. Distributions and existing pension payments will continue.

The MacarthurCook Mortgage Fund, also previously rated three stars, also recently put a freeze on redemptions.

For ING, the ‘on hold’ rating relates to the group’s mortgage funds and Income Plus funds, eight funds in total.

S&P Fund Services analyst Peter Ward said the funds had been affected by negative investor sentiment following the Government’s guarantee on bank deposits, and that the ‘on hold’ ratings reflect the change in withdrawal processes of the funds, rather than any other aspect of the products.

Yesterday, Morningstar placed four key mortgage funds ‘on hold’ — those of Australian Unity, AXA, Mariner and Perpetual, but reinforced that the underlying strategies of those mortgage funds and the people running them were sound.