KEY POINTS:
ING says it is too soon to know if a US$700 billion plan by the US Government to buy up bad mortgages will have any effect on its frozen funds.
It is more than six months since the investment manager put a stop on 8000 investors pulling their
money out of the ING Diversified Yield and Regular Income funds.
The funds, which have a combined $521 million invested in them, are invested in collateralised debt obligations and collateralised loan obligations which package up bank loans and other types of debt into securities.
Less than 10 per cent of the funds are said to be invested in the disastrous sub-prime mortgage sector.
On Sunday the US Government proposed a plan to buy up troubled mortgage-backed securities to help the financial sector get through the crisis.
Exactly how this would be done is still being worked out but one suggestion is for financial institutions to name a price for their bad mortgages, with the Government then able to choose to buy the cheapest in a reverse auction.
Yesterday an ING spokeswoman said it was too soon to comment on the proposal. "It is far too early for us to make any comment about whether yesterday's announcement from the US Government will or will not impact the two funds in any way."
She said the two funds remained suspended and ING was working through the options for the future of the funds.
One financial adviser said he had been told by ING at a briefing recently that it expected to make an announcement in October about what it would do with the funds.
But he poured cold water on the likelihood of the funds benefiting from the US bailout.
"They might have funds of funds. So they might not even hold the securities directly."
He said some advisers had also asked for the funds to be independently valued to ensure investors were not paying higher fees because the products were now worth less.
But he said that because there was no independent trustee - the trustee is also ING - it had been impossible to get the firm to produce an independent report .
When ING announced the freeze in March the unit price for the Diversified Yield fund was 81.05c and the Regular Income fund was 70.5c, down from their $1 issue price.
Yesterday the unit price for the yield fund was down to 62.35c and the income fund was just 55.45c - almost half the original price.
The funds were heavily sold through the ANZ's financial advisers. ANZ owns 49 per cent of ING NZ.