Allblue proposed Closure of EURO class


BCAB Allblue just proposed the closure of the EURO class. With roughly 14 million in this class it is not huge but on the other hand many funds would be quite happy to have this volume. So the size can not be the real reason and I found an article, which shed some light on the problem. Apparently Hedgefunds realized that the shares were trading with a discount to the NAV and decided it would be a perfect investment idea using a lopehole of the constitution.




Originally ment to protect the investors, if the shares drift to far off the NAV on a 12 - month rolling window - shareholders can decide if they wish to redeem the shares or stay on board.

So, how did they make a profit - well they buy a liquid class like the GBP and build up a discounted position over time - than they swap to a small currency class in this case USD or EURO and wait for the proxy. Because they have a large enough position they get the majority of the votes in this class and can redeem their shares with the NAV - accounting the balance as profit.


So far I would not mind but once the lopehole is detected it will be closed - like in this case closing the smaller share classes to avoid exactly this szenario and this is of concern to me.

First one needs to ask, why does the spread exist - when their is almost no trading in those classes. Second instead of closing the smaller EURO class, why don't you grow it and put some marketing behind it. Given the reputation and track record this shouldn't be to hard to do.

Those investments are made for the long-haul and being redeemed is a forced exit and not in my interest at all.

Whose to blame?
or who cares?

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