Vanguard index fund’s $7.5 billion cashflow hit raises questions about future of UK oil fund

VANGUARD AIRLINES has reported a $7 billion cash flow hit from its £12 billion fund’s oil funding.

The company, which has been criticised by shareholders over the financial performance of its oil fund and has warned that it will not fund the UK oil industry with more than a quarter of its revenue from the fund, reported a loss of £2.5bn in the quarter ended March 31.

Shares of the company fell 1.7 per cent to $13.69, while the S&P 500 was up 0.4 per cent at 1,058.

The fund has raised about £8 billion ($10.1 billion) so far, with some of that funding from investors in the oil industry.

In the second quarter, the fund generated cash from trading activities of more than £2 billion, including trading of assets of the Royal Dutch Shell and Chevron companies, and the trading of cash and cash equivalents of other oil companies.

The firm’s first insurance fund is also in danger of not getting enough cash.

In a separate note to investors, the company said it was considering raising further capital from other investors, including pension funds.

“We believe that in the long term, the oil fund will remain financially strong,” said Michael Gervais, an analyst at S&p Capital IQ.

“However, we will be more cautious in the near term to avoid a repeat of the financial problems of the early years of the fund’s existence.”

VANGUPT AIRLINS shares were trading around $20.10 at the close on Thursday, down by nearly 2 per cent on the day.