Castlestone Management to close Ucits funds and liquidate Dublin-based business

Castlestone Management plc has announced it is to close the firm’s funds and liquidate the business.

The Dublin-based firm says the decision to close the funds is in the best interests of the relevant shareholders, citing that the net asset value of the funds is currently below the minimum viable amount.

The closure of the aliquot commodity fund, aliquot agriculture fund, intelligent portfolio IQ asset allocation fund and aliquot precious metals fund will take place at 10am on August 11, 2011.

Castlestone’s BVI funds range remains unaffected and will continue to be advised by Castlestone Management Inc.

Castlestone has faced a number of problems in recent months. Last month, the FSA executed search warrants on Castlestone premises in London and Chichester. The City of London police confirmed they were involved in the execution of the regulator’s London searches. Castlestone said it is unable to disclose the exact nature of the investigation as it is bound by the FSA’s confidentiality rules but insisted it was a regulatory, rather than criminal, issue.

In June, three Castlestone funds were temporarily closed to new subscriptions following a review by the Irish Central Bank. Both Castlestone and the Irish Central Bank have refused to reveal the reasons behind the suspension but have confirmed that it related to Ucits IV paperwork.

As recently disclosed by Money Marketing’s sister website FundWeb, Castlestone’s Intelligent Portfolio displays high levels of externally sourced gearing. The portfolio acts as a fund of funds across a series of its in-house funds. The 191.7 per cent gross exposure the fund demonstrates can be typical for institutional funds but it is uncommon practice for retails funds.

In a statement, the firm says: “As a result of this decision and in order to facilitate the orderly realisation of the assets of the Company and Funds, the calculation of termination expenses and the prompt repayment to Shareholders, the Directors have also resolved that in the meantime no shares will be issued or sold.  The Central Bank of Ireland and the Irish Stock Exchange have been notified accordingly.”