Past performance haunts AXA
TheAXA Asia Pacific Grouphas been forced to terminate or modify a series of print and television advertisements after theAustralian Securities and Investments Commission (ASIC)found the use of past performance figures in the advertisements to be misleading.
The corporate watchdog has imposed an enforceable undertaking on AXA requiring it to reveal how its past performance figures have been calculated after the funds management group did not disclose in its advertisements that past-performance figures were purely hypothetical and not actual past returns.
AXA has also been forced to write to all unit holders who invested in either the AXA Australian Equity-Industrials Fund or the AXA US Equity-Premier Growth Fund and offer to address any investor concerns.
Between mid July and early October 2001, some AXA advertisements referred to five year returns of 19 per cent per annum for the AXA Australian Equity-Industrials Fund and 25.1 per cent per annum for the AXA US Equity—Premier Growth Fund.
Both funds had only been in operation since July 2001, with AXA basing the performance figures on the returns of other funds.
“[The] enforceable undertaking will help ensure that consumers can make investment decisions based on clear and accurate information,” ASIC executive director of consumer protection Peter Kell says.
Kell says ASIC’s scrutiny of the AXA advertisements is part of a wider crackdown on the use of past performance figures in the marketing of investments.
“ASIC will shortly be announcing a broader project on this issue that will aim to improve the way in which past-performance information is used in marketing,” he says.
AXA has agreed to set up a complaints handling system for consumers who have been influenced by the advertisements.
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