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As investigations into Kellerman and Belvedere get underway, investors shouldn't worry about their unit trust investments

by , 27 March 2015

This week, there has been a lot of coverage of an alleged Ponzi scheme that could affect investors of South African unit trusts.

The allegations surround a South African fund manager, Cobus Kellerman, and his involvement with Mauritius-based Belvedere Management.

This has resulted in many investors worrying about the security of their investments.

So what's going on? And are these investments at risk?

Let's take a closer look…


Investigations get underway into Cobus Kellerman and Belvedere


Yesterday, the Financial Services Board (FSB) announced that it’s assisting “with investigations into alleged Belvedere Ponzi scam mastermind Cobus Kellerman,” reports Fin24. The FSB is assisting the Guernsey Financial Commission and the Mauritian Financial Services Commission.

A Ponzi scheme is “a fraudulent investment operation,” notes Wikipedia. Returns paid out to investors comes from capital received by new investors, not “profit earned by the operator”.

The FSB says it “has also engaged Mr Kellerman” and will take necessary action if required, adds Fin24.

This week’s allegations have led to a number of investors worrying about the money “they put into unit trusts managed by Kellerman… [being] at risk,” says MoneyWeb. Mr Kellerman founded “Clarus Capital in 2009”. But through a change in management last year, Mr Kellerman hasn’t had anything to do with these funds since last July.


Investments in South African unit trusts are safe


Despite investors’ worries, with the highly regulated unit trust industry in South Africa, Kellerman couldn’t have taken money out of funds, adds MoneyWeb. This is down to “custodians that stand between investors and the fund managers to prevent any kind of fraudulent activity”.

With yet so much unknown about the activities of Mr Kellerman and Belvedere, time will tell what investigations uncover. But for the moment, investors with capital in South African unit trusts look unlikely to be affected.

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As investigations into Kellerman and Belvedere get underway, investors shouldn't worry about their unit trust investments
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