Query over suspended Arch cru funds

The Arch cru fund range was ­suspended by platforms early this month, a week before Capita, the funds’ administrator, announced their total suspension on March 13.

FundsNetwork confirms that it suspended trading in the funds on March 5 and that it informed cru about its decision, but not Capita and Arch. The platform does not plan to lift the suspension immediately.

Cofunds confirms that it suspended the range on March 9. It says Arch cru was aware of its decision because it was discussed in a ­meeting. A statement on cru’s website said on March 13 that it was advised to suspend the funds “because of a lack of liquidity to deal with redemptions”.
Capita said in its official statement: “It is in the interests of all shareholders in the funds to suspend the issue, cancellation, sale, redemption and transfer of shares in the funds” owing to a “significant lack of market liquidity in the assets which comprise the funds’ portfolios”.

Last week cru launched an online petition to prevent a “fire sale”. It has asked advisers to “call upon Arch, Capita and the Financial Services Authority not to liquidate underlying assets held in the Arch cru portfolios at a time when all asset classes are significantly undervalued in the current economic climate”.

Gavin Haynes, investment director at White­church Securities, says he did not recommend the Arch cru range because he “couldn’t understand the underlying holdings, liquidity and volatility”.

Darius McDermott, Chelsea Fin­ancial Services’ managing director, says that while the average fund in the Cautious Managed sector was down almost 20%, the Arch cru funds were down by 3.5% and 3.8%. “They’re well ahead of the average … and performance is still very strong,” he says. “[But] the difficulty is what they invest in.”

McDermott says the Arch cru Income Portfolio invests in sub-funds and at least one of these underlying funds invests in private equity.

McDermott adds that the industry questions why the performance of the funds was so good. “Private equity is down and I don’t understand why cru is not down.”
Cru was not available to comment on these points.