NZ News 27th April 2000

Australian-based fund manager Perpetual Investments is planning a return to the New Zealand market after several years absence.

Australian-based fund manager Perpetual Investments is planning a return to the New Zealand market after several years absence.

National marketing manager for Perpetual, Michael Young, who was in New Zealand recently on a fact-finding tour, says a number of factors now make New Zealand attrac-tive to the company.

Young says Perpetual used to have a presence in New Zealand through its alliance part-ner, the US giant Fidelity, which pulled out of the country in 1996 when tighter laws governing registration of prospectuses and investment statements came into force.

“Because of our strategic alliance with Fidelity we have an international outlook which fits in well with New Zealand,” Young says.

“New Zealand managers tend to have a higher weighting towards international equities than their Australian counterparts.”

He says while the demand for overseas funds in New Zealand is likely to be high it is also now much easier to service advisers here.

“Through email and our Internet site, it’s simple to keep advisers in New Zealand up to date.”

Young says the recent growth of master trusts and wrap accounts here is another reason Perpetual sees good opportunities in New Zealand.

“It is more economical to be included on the lists of master trusts and wrap accounts and while Perpetual is not on the recommended lists of any providers yet, I’ve spoken to sev-eral including AEGIS and Boxer,” Young says.

“The retail market is much more expensive to enter and Australian managers have a bad reputation for coming to New Zealand and suddenly pulling out.”

Perpetual has already registered its wholesale prospectus in New Zealand and will also register a global retail product.

“We have some New Zealand clients already using the global retail product and we were advised we had to register the prospectus here,” Young says.

Perpetual will be targeting the master trust/wrap market and has no plans to create brand awareness in the public arena.

“Perpetual aim to enter New Zealand in a planned and sensible fashion. We don’t want to retreat in a few years,” Young says.

“Our next move is the launch of a roadshow later this year and another early next year. We don’t intend to create a public brand, that’s expensive and difficult, but we want to create adviser awareness of Perpetual.”

Young says while the New Zealand financial planning industry appears very professional, it is surprisingly different from the Australian market.

“Individual planners in New Zealand seem to have different ways of doing business and the industry is far less regulated than in Australia,” Young says.

“Even with all the regulation in Australia, problems still arise with planners. There’s been a couple of cases reported recently, but I still believe the adviser certification process is good for the industry.”

WestpacTrust has altered the pricing structure of its investment products to attract more people into long term investments, according to head of WestpacTrust Financial Services, Girol Karacaoglu.

The bank has been under criticism recently over its range of banking fees and was voted the worst bank in the latest Consumer magazine survey of retail banks.

However, fund flows into its retail investment products have been strong over the past two years with the bank consistently featuring in the IPAC top five retail fund managers in terms of fund flows.

In its latest move, WestpacTrust offers no entry charges for customers who join its unit trusts and retirement plan products and who pay through regular direct debits or auto-matic payments.

For lump sum investments of a minimum $5000, a flat service fee of $100 will be charged rather than a joining fee based on a percentage of the initial investment.

Each fund has a weekly administration charge of $1.50, a sliding scale management charge up to 1.75 per cent per annum and no exit charges. The administration charge is waived until the fund reaches $5000.

“New Zealanders are not putting enough money into long term savings. One reason is the perception that entering long term savings schemes is expensive,” Karacaoglu says.

“We have responded to customer needs by reviewing our pricing strategy to make it eas-ier for ordinary New Zealanders to get into the habit of saving for their retirement.”

In addition to the price modifications, WestpacTrust has also created a team of 700 quali-fied investment consultants, guaranteeing at least one trained consultant will be in each branch.

“WestpacTrust is a trusted provider of financial services with more than 200 branches around the country,” Karacaoglu says.

“The creation of 700 qualified consultants means that customers have convenient access to local and qualified investment advice. To ensure a high standard of advice is main-tained, all 700 consultants have had to gain a qualification through the Open Polytechnic in investment advising.”

A diversified investment portfolio approach has proven to be the safest and most consis-tent way to “beat the bank”, according to Aaron Hing, head of financial advice at Spicers Portfolio Management.

Hing says the latest Spicers Personal Investors Index shows returns from a diversified portfolio have remained positive despite recent volatility in the markets.

“Returns for a diversified investment portfolio were 2.7 per cent for the month and 12.4 per cent per annum since the inception of the index in June 1985,” Hing says.

“The latest result confirms earlier trends and shows that for people saving for retirement or some other goal a diversified portfolio is the best method.”

He says the index clearly shows the benefits for most people of operating in the risk con-trolled environment that a diversified portfolio provides.

“The index operates as a yardstick and confirms the gut-feeling that a long term passive approach is the best way to invest,” Hing says.

“Many advisers use the index as a simple tool to show their clients the benefits of a di-versified portfolio versus returns from bank deposits.”

Hing says the index is also useful for educating clients about return and volatility, high-lighting the need of more risk to gain more over time.

Spicers is also in the process of bedding down its partnership with Australian planning group Monitor Money.

Hing says the process is still in its early stages and both companies are working out how to best fit their businesses together.

“We are still learning from each other. However, there are a number of synergies with Monitor Money and both firms have a common philosophy,” Hing says.

“We are yet to decide how we will work together but there are no plans to promote the Spicers brand in Australia.”

The investment industry has expressed dismay at a new takeover code likely to be im-plemented before the end of the year.

The code, based on the previously sidelined 1995 Takeovers Code which in turn was modelled on the Australian takeover rules, has been put before the Takeovers Panel for consultation on technical amendments with interested parties.

Commerce Minister Paul Swain says the primary aim of the code is to prevent control of a company shifting by the transfer of a minority share block without the participation of other shareholders.

"The Government intends to implement a takeovers code as soon as possible to ensure that small investors get fair treatment in takeovers situations and to improve overseas perceptions of our market," Swain says.

"The consultation is on technical aspects of the code, it is not on whether there will be a code."

However, reaction from industry groups has been largely negative with the New Zealand Stock Exchange (NZSE) and several fund managers coming out against the code.

Managing director of the NZSE, Bill Foster, says the New Zealand market doesn't need more regulation but just more cost-effective enforcement of current rules.

Head of New Zealand equities at AXA, Andre Bascand, has expressed horror that the Government would even consider adopting the code