Relocation from Luxembourg to Switzerland—Mellinckrodt 2 SICAV to be liquidated. M3 to follow in the new year.
Upon recommendation of the initiator Mellinckrodt & Cie. AG, the administrative board of Mellinckrodt 2 SICAV has decided to initiate the liquidation process for the company and the fund.
What does this mean for the investors?
As of today, the fund is closed for the issuance and redemption of stock certificates. This is necessary to ensure the equal treatment of investors. Thus, the liquidation costs in the amount of approximately 1% are distributed equally to all investors. At the same time it is ensured that all investors receive equal credit for the increased value of the fund after reimbursement of withholding tax. We do not yet know the exact amount of the reimbursement as of today, and it is therefore not reflected in the current fund price. However, it is very well possible that the credit to investors from the reimbursement of withholding tax will be significantly higher than the liquidation costs.
What will happen to the fund assets?
For the time being, we will continue to manage the fund as we have done in the past. We are currently planning a complete liquidation of the fund assets by the end of the year. This does not pose a problem and can occur within one trading day since the fund holds no illiquid investments. Regardless, the fund managers can continue to buy and sell on behalf of the investors.
When can investors access their money?
We are currently planning to reopen the fund at the beginning of 2020. Regardless of the liquidation, which may take up to nine months, stockholders can redeem their stocks in early January. The repayment will be processed subsequently according to the terms specified in the prospectus (T+5). The time frame in which investors are not invested in the stock market due to the liquidation will last only a few days if they choose to invest in stocks again in early January. The months-long blockage of money in fixed deposit accounts as is the case in other liquidations will be almost entirely avoided with our process.
Why is the fund being liquidated?
There are several reasons for the liquidation of the fund. The main reason is the fact that the previously growing market for equity funds has been clearly shrinking. As a result, investors are no longer looking for opportunities to diversify in a growing market but rather focus on investing in market-leading products. Since we have unfortunately not been able to exceed the threshold of €100 million in fund assets, we decided a year ago to stop active sales in Germany and explore new avenues.
However, the shrinking equity fund market is not the only reason for closing our fund: Due to the big changes in the political arena, we prefer the Swiss franc as fund currency for the future. In weak market phases, this currency tends to prove strong, and many may not realize the strong appreciation of the Swiss franc since the introduction of the euro. At the time, the price compared to the euro was at around CHF 1.6, today this number is 1.1.
The regulatory environment is another reason: When politicians in Berlin fantasize about a general ban on shorts in light of a potentially hard, unregulated Brexit, then consequences of these measures would reach even further than the implications of the already implemented regulation of apartment building construction in Berlin. We prefer regulators who act more rationally such as those in Switzerland or those in England once a decision about Brexit has been reached.
What is hiding behind M3?
With our new product not licensed for public sale in the EU, we cannot provide information about it on this website as of today. We will be happy to consult with qualified investors. Please find our contact data on our website.