ABSA Money Market

[adrianx]

I'm still trying to translate this email from ABSA into something other than "we are stealing some money from you because we just had to have African Bank in your portfolio..... because of the word African... which makes us look good."

Anyway, it's not the end of the world, I just thought I'd share the email.

Dear client 16 August 2014

Absa provides confidence and certainty to Absa Money Market Fund investors

On 10 August 2014 the South African Reserve Bank (SARB) placed African Bank Investments Limited (African Bank) into curatorship, providing the industry with certainty.

In line with the guidance provided by the Financial Services Board (FSB) to the unit trust industry on 11 August 2014, Absa applied an adjustment of approximately 0.3% to the value of investments in the Absa Money Market Fund.

The Absa Money Market Fund for August will reflect a 0% interest rate for 11 August 2014, as well as a reduction in the actual Rand value. This action ensured that all investors were treated equally. Furthermore, the interest rate normalised from 12 August 2014.

In a move to provide confidence and certainty to Absa Money Market Fund investors, Absa announced yesterday, 15 August 2014, that it has removed all African Bank investments from its Absa Money Market Fund.

The Absa Money Market Fund will now only have exposure to the five largest banks in South Africa and the government. This will also ensure that all Absa Money Market Fund investors are treated in a consistent manner, and will provide certainty and confidence to investors in Fund, and all clients will benefit from this clarity.

The SARB brought certainty to the industry with its announcement and through our action today we have provided further certainty for all investors in the Absa Money Market Fund.

For detailed information and responses, please feel free to reach out to our call centres on 0860 111 456. They are available to provide you with the necessary support.

Sincerely

Errol Shear Armien Tyer
Chief Investment Officer: Absa Active Asset Management Head Investment Cluster
Wealth and Investment Management Wealth and Investment Management

 

[LaraC]

That would mean Absa saved a cool 7 million on interest payments for the day.

(Calculated on fund size of 51.6 billion and return of 5%)

https://www.absainvestments.co.za/wealth-and-investment-management/e-docs/fund-fact-sheets/Absa%20Money%20Market%20Fund.pdf

 

[blaaislaai]

Got the same, that 0.3% might seem small, but huge loss to the huge investors

 

[adrianx]

I'm just wondering why ABSA didn't kick African Bank to the curb many months ago. Economists have been talking about African Bank and Ellerines' troubles for ages.

 

[LaraC]

Got the same, that 0.3% might seem small, but huge loss to the huge investors

Yes it is a huge loss. A fund that is supposed to be low risk and you end up losing 154.8 million does not look good for your performance/investment skills.

 

[supersunbird]

Yes it is a huge loss. A fund that is supposed to be low risk and you end up losing 154.8 million does not look good for your performance/investment skills.

Its ABSA. Even the top non-bank funds that win awards year after year had exposure.

Now to every damned person anywhere on the internet moaning about this write-down, investment is risky (even you used the term "low risk" yourself LaraC), if anyone think its not lets go at it, feel free to post here. When last was there such a loss in money market funds? Yeah, its rare so when it happens there is a big fuss made about it, in the mean time higher risk investments go thought this all the time and little fuss is made.

Even not being invested is risky (inflation risk to name but one). The safest is a bank account, because its backed by the SA Reserve Bank up to a point, but that might be even less safe than some other countries Bank Accounts backed by that much stronger countries Reserve Bank.

 

[LaraC]

I'm sorry if I offended you.
I know there is risk involved in money market funds.

 

[supersunbird]

I'm sorry if I offended you.
I know there is risk involved in money market funds.

No you didn't offend me, I'm just grumpy sometimes (too often?), my apologies, my rant is meant at everyone so "shocked" by this (so you are is just a small part of the "shocked" people index, see why indexing is good for diversification ), your post just triggering me fed-up-ness finally. Sorry again.

 

[adrianx]

No you didn't offend me, I'm just grumpy sometimes (too often?), my apologies, my rant is meant at everyone so "shocked" by this (so you are is just a small part of the "shocked" people index, see why indexing is good for diversification ), your post just triggering me fed-up-ness finally. Sorry again.

Who in this thread is shocked? Like I said before, I find it strange that ABSA (as a financial institution and not a political party) is only [-]acting[/-] reacting now!

 

[Nefertiti]

I find it strange that ABSA (as a financial institution and not a political party) is only [-]acting[/-] reacting now!

I wonder how much of a political motivation was behind it. There are complaints that transformation is not happening quickly enough in the financial sector and the big banks felt "obligated" to support African bank.