BT gives guarantees but still suffer ratings downgrade

BTFundsManagement has given assurances that despite the poor performance of its Australian Equities fund it will not close the fund to new investors nor wind it up in the near future.

The statement from BT investment products general manager Dean Thomas was made to van Eyk Research and will be released in their client newsletter along with news that van Eyk has dropped the Sagitta funds management rating from A to B.

In the statement Thomas says, “While it is not possible to give guarantees in respect of the ongoing operation of funds, … I can state that … it is not our current intention to close this fund to new investors nor wind up the fund in the immediate future.”

Van Eyk head of performance analysis Sidney Chong says that while the statement is not technically a guarantee, it is “at least something to hold over Westpac/BT in the future”.

However the importance of the B rating for Sagitta, despite the fact the group will lose its name in the combined entity, is that Sagitta has taken on many of the funds management duties in the combined group.

“If the rating was an A it would have been better news for investors in the BT funds because they would have received an upgrade in managers without having to switch funds,” van Eyk managing director Stephen van Eyk says.

The research house has praised BT for its recent decision to place a 0.5 per cent rebate on the management fee but has encouraged the fund manager to extend the length of the rebate period from six months to one year.

Van Eyk says BT had not yet decided if it would do so and he encouraged financial advisers to be active in helping the funds management group make a decision.

The report also states that BT’s performance has started to improve with the group moving closer to benchmark performance in the last three months after an extended period of negative outperformance averaging three per cent.

The research group has also said that remaining investors are now in a position to gain from increased tax benefits with Chong saying investors who have already incurred considerable CGT losses, have relatively small amounts of money invested in the fund, are more conservative investors or who only have a short investment time frames of around two years, could benefit from remaining in the fund.