Pie Funds has shuttered its $30 million Multi Strategy Fund just two years after launch following a run of poor performance that saw it down about 13 per cent over the last 12 months.
In a letter to investors, Pie chief, Mike Taylor, says the call to close the Multi Strategy product was “hugely disappointing for me personally and for the Pie team”.
“I am one of the largest investors in Multi Strategy,” Taylor says in the letter. “Back in 2016 we saw the need for a multi-strategy fund for New Zealand investors and I didn’t think there were any good products in the market. We tried to innovate and do something different from our usual, and successful investment formula.
“But Multi Strategy hasn’t performed. It has been incredibly frustrating having one of our funds falling so short of investor expectations.”
While Pie considered revamping again the Multi Strategy investment approach, which allocates across different asset classes with the ability to short-sell equities, Taylor says ultimately the manager “decided it was better to stick to what has successfully grown investor wealth over the long-term – long-only active investing”.
The now-closed Pie Multi Strategy fund has halted all redemptions until the portfolio is fully cashed-out, a process that is about 95 per cent complete, the letter says.
“We’ve accepted the only thing to do is prevent further reduction in Multi Strategy’s unit price by moving to cash, prior to closing the fund,” Taylor says. “It means investors paid out from the fund will be treated equitably.”
Investors will have the option of receiving cash or re-investing in other Pie products. The manager, which has offices in Auckland and Hawke’s Bay, also stopped drawing fees on the Multi Strategy fund last week.
Since inception in November 2017 until the end of March this year, Pie earned about $1.4 million in fees from the Multi Strategy Fund including $286,000 in performance fees.
Pie dropped performance fees on all of its funds this April while increasing the base management across most of its now-nine products.
The boutique has just over $1 billion in funds under management, including about $80 million or so in its Juno KiwiSaver scheme (as at the end of September).
After abandoning an attempt to partially sell its business in July, Pie said it would focus on an “internal management proposal” to spur growth in new areas such as its KiwiSaver, global equities and multi-strategy funds.