AMP freezes NZ fund after investor run

The group's stumble came as the chief of a number of Mirvac-run funds also suspended this week said they should be able to recover the great majority of loans made to troubled property developers.

The total number of NZ finance companies, mortgage and investment trusts to run into difficulties in the past two years has hit 36, the market monitor interest.co.nz said, after the suspension of the $300 million AMP Capital NZ Property Fund.

With investors rushing to withdraw money from non-bank finance companies, the country's troubled funds now total about $4 billion. The money was drawn from more than 150,000 investors, the website reported.

The managing director of AMP Capital New Zealand, Murray Gribben, said it was "difficult to understand" why investors had lost confidence in the fund, given it had about one-third of its investments in buildings occupied by government.

"There seems to be a sentiment around property and property exposure which is causing these issues," Mr Gribben said. "The lack of confidence is a little endemic and it is running across the market."

In a bad week for the NZ industry, the Guardian Mortgage Fund, owned by Australian bank Suncorp, also froze withdrawals from investors on Wednesday. While the Australian market is not in such dire straits, the squeeze on credit is causing problems for property and mortgage funds.

Mirvac Aqua suspended three funds this week, which have invested about $240 million on behalf of hundreds of small investors and financial planners.

The chief executive of Mirvac Aqua, Stephen Tunley, said the decision was based on concerns about a number of loans to developers exposed to falling property prices.

Normally, developers would be able to refinance with a bank or a different finance group, he said. But for ventures like Mirvac Aqua, the absence of bank credit had made it more difficult to move troubled loans off their books.

The potentially troubled loans were worth $39 million, but the risk was "very modest" compared to the total exposure, he said.

Mr Tunley said he was not confident about getting 100c in the dollar back on the impaired loans - made to developers in NSW, Victoria and Queensland - but he was "confident that it would be a lot more than 80c in the dollar".

He said he would work with each of the property developers to resolve the issues in the next couple of weeks.

AMP shares fell 50c to $6.06 yesterday.