A Perth investment fund which trumpeted the “reliability, consistency and predictability” of its foreign exchange trading algorithm has gone under after losing nearly $12 million of investor funds.
Noon Investment publicly targeted annual returns of 35 per cent but is believed to have been brought undone by hefty trading losses dating back to as early as March that forced directors to call in administrators from Deloitte two weeks ago.
It is the latest in a string of failed WA investment schemes promoting big returns that have cost investors chasing quick profits hundreds of millions of dollars over the past four years.
Structured as a unit trust, Noon Investment was set up in early 2020 on the back of a trading system developed by its co-founder, IT engineer and private foreign exchange trader Noel Northcott.
It did not have an Australian financial services licence, according to Deloitte.
Noon’s website says it traded foreign exchange markets “in a consistent, reliable and predictable manner” using a portfolio of automated software algorithms.
“We achieve strong and predictable performance when compared to most other funds always ensuring that risks are robustly managed,” the website says.
About 40 investors backed the fund, which took minimum investments of $50,000. One of the investors ploughed in $2m and another $1m.
Lead administrator Sean Holmes, who was put into the fund’s trustee Noon Management (Australia) Pty Ltd on August 17, said about $1m had been recovered from two Noon accounts.
His focus remains on investigating the company’s failure, with an eye to the timing of Noon’s trading losses, and seeking to realise anything of value for investors.
“We’re trying to understand what transpired so we can meaningfully articulate that for creditors, and then considering whether there’s an ability to sell the trading algorithm,” Mr Holmes said.
According to Noon’s last monthly investment report, for March, the fund had returned a cumulative 99 per cent since its formation in January 2020. That included a 15.8 per cent return for the half-year to the end of March, easily outperforming the S&P-ASX200’s 5.5 per cent gain.
“Based on the actual performance of the Noon Investment Fund over the past 27 months, investors can expect their capital to double every 27 months. This is an excellent statistic to keep in mind,” Mr Northcott, Noon’s chief executive and fund manager, wrote on April 4.
“This confirms that the Noon Investment Fund provides excellent short-term returns as well as excellent medium-term and long-term returns,” he said.
Given the low interest rates of recent years, some WA investors have thrown caution to the wind in the pursuit of higher returns, despite regular warnings from regulators about the risks.
In winding up a $260m unregistered management investment scheme run by Chris Marco, Federal Court judge Neil McKerracher said in December 2020 that he could not overlook that investors in the Marco scheme were attracted by the prospect of pocketing “extremely high interest returns from investments, when those returns were far beyond those normally available”.
“Those investing with Mr Marco or least some of them, must surely have known that promises made were too good to be true,” he said.