HMF is an investment management business operated by South Canterbury businessman Allan Hubbard.
The statutory managers said yesterday that while the HMF share portfolio had performed positively over the past few months, the recent receivership of South Canterbury Finance had an equally adverse effect on value.
Grant Thornton spokesman Richard Simpson said the statutory managers had appointed a firm of independent investment advisers and sharebrokers to provide investment advice and assistant in managing the share portfolio of HMF.
"We have been advised that the portfolio appears to have been constructed on a high-risk, high-return philosophy and, until we are able to sell certain investments, there is a risk of loss."
About 24% of the current portfolio value was in unlisted entities.
Australia-listed investments outside the ASX200 represented nearly 24% of the portfolio, with a large percentage of the listed portfolio made up of smaller listed company investments which might be difficult to sell because of limited demand, he said.
About 32% of the portfolio was invested in resource and exploration companies.
There were important legal questions to be considered as the statutory managers along with their professional investment advisers developed strategies to ensure HMF was wound up in a manner which would maximise the returns to investors while reducing the risk to their portfolio, Mr Simpson said.
The nature of the fund was not clear, and although investors might consider they had an individualised portfolio, features of the underlying management of the fund suggested investors' funds were pooled.
"We are likely to be seeking the guidance of the court as to the nature of HMF and the appropriate method for the ultimate distribution of the sale process of HMF assets to investors."
That entailed a large amount of preparatory and ongoing work.
The costs of that work would be significant and the statutory managers would attempt to find other options, he said.
Grant Thornton had reported the return to investors would be at least 25% less than the value in the statements prepared by Mr Hubbard as at March 31.
The recent receivership of SCF would adversely affect the fund but positive performance by the rest of the portfolio offset that.
HMF portfolio
June 20 (date of statutory management): $42.5 million
September 17: $49.1 million
