Three controversial funds axed by Standard Life

By DAILY MAIL REPORTER
Updated: 19:55 EST, 3 May 2011

Insurer Standard Life has shut down three controversial funds used by thousands of pension savers to cushion themselves from stock market falls.

The funds, Sterling Global Liquidity, Euro Global Liquidity and U.S. Dollar Global Liquidity, hold £3.5 billion between them. They are used by pension funds rather than being sold directly to customers.

They are classified as ‘money market’ funds — meaning they invest in complex financial instruments designed to provide returns similar to cash.

Axed: Standard Life's 'money market' funds

Money market funds are favoured by nervous investors, such as those approaching retirement or pensioners. But they have been shrouded in controversy since 100,000 savers in Standard Life’s Pension Sterling fund lost £100 million overnight in January 2009.

A year later, the insurer was ordered to pay compensation and fined £2.45 million for leading people to believe their money was safely tucked away in cash desposit accounts.

Since the debacle, City watchdog the Financial Services Authority has stepped up its scrutiny of all money market funds.

Customers in the three defunct Standard Life funds will be given the chance to transfer to similar investments run by Deutsche Bank.

The insurer said impending rules forcing firms to hold more cash reserves threatened to make running ‘money market’ funds ‘unattractive’.