Managed funds investments safe: govt

The federal government has moved to reassure Australians with investments tied up in managed funds that their money is safe despite billions of dollars in assets having been frozen. Work had begun on a plan to unlock almost $12 billion in assets frozen in the wake of a run on institutions not covered by the government's bank deposits guarantee announced last week.

The guarantee applies only to authorised deposit-taking institutions such as banks,
building societies and credit unions, but not investment funds.
"... ASIC (Australian Securities and Investment Commission) and the Treasury are
working on this particular problem of the frozen mortgage funds in order to see what
further can be done to get the situation back to normal," Finance Minister Lindsay
Tanner said.
Mr Tanner said that in the general sense, investors were not in danger of losing
their money or their income streams.
"What's happening is that their ability to access their money is being restricted,"
he said.
"That's obviously a problem, and particularly for some people, that'll be a serious
problem. But it's nothing like the problem of people losing their money."
Fund manager Perpetual, which last week joined a host of other non-bank institutions
in freezing investors' assets, said it planned to lift a freeze on redemptions as
quickly as possible.
Perpetual chief executive David Deverall said it was in the interest of the company,
the government and investors to reopen frozen trusts.
Mr Deverall said Perpetual was planning to talk with the government about extending
the guarantee to cash management trusts and possibly mortgage trusts.
"The word 'guarantee' is clearly a very, very important word in the minds of
consumers at the moment," he said.
But Mr Tanner said the guarantee would not be extended to include the investment
fund industry because it was not regulated by the Australian Prudential Regulation
Authority (APRA).
Mr Tanner said the government believed measures announced on Friday - including the
imposition of an insurance premium on deposits over $1 million - would halt the
flight of investment dollars to banks.
However, he refused to say when the money tied up in the investment funds might
become unfrozen.
"We can't make predictions about specific funds, because the guarantee regime is not
the only issue in play here," he said.
"You've got the international squeeze on credit, you've got the fall in share prices
all around the developed world - all of these things have been contributing to the
problems that some of these funds are having."