Short-term focus prevents meaningful conclusions

Dear Sir,

After reading your front page article, entitled “Fund managers strike out” by Jason Spits (Money Management, May 11), we felt compelled to respond in order to pro-vide your readers with a more balanced view.

Dear Sir,

After reading your front page article, entitled “Fund managers strike out” by Jason Spits (Money Management, May 11), we felt compelled to respond in order to pro-vide your readers with a more balanced view.

The general thrust of the article suggested that fund managers who had in recent months launched their own versions of technology-related fund had made a timing error in doing so, given the volatility of technology stocks over the short term. Whilst the article purported to contain quotes from managers involved, we believe that the extreme short-term focus of the article prevents any meaningful conclu-sions being able to be drawn.

The period of ‘analysis’ upon which the entire article was predicated was the four week period to 26 April 2000… four weeks of performance from which to then conclude that managers had erred. We would suggest that, given the obvious growth-oriented nature of global technology investments, a meaningful assessment of such funds’ appropriateness can only be made after a medium-to-long term time horizon. Only investors who are prepared to invest for the medium to long term should ever consider an investment of this type. At Colonial First State, we know that Australia’s financial planning industry clearly recognises this — evidenced to us every day in the nature of their support of our own Global Technology & Com-munications Fund.

In addition to this, we would like to point out that the Colonial First State Global Technology & Communications Fund actually commenced on 1 November 1999 — not just in the last couple of months. As such, although comments referred to in your article suggest otherwise, we do not regret the timing of the launch of this fund. In fact, quite the contrary. Whilst your article highlighted the already well published short term volatility of technology stocks, you negated to mention that the Colonial First State fund in question was, as at the time of writing, showing a healthy total return since inception, with the $1.00 starting unit price having in-creased to $1.38, delivering a handy 38 per cent return to day one investors.

We believe it is important that your readers are aware that we in no way regret the launch date of the Colonial First State Global Technology & Communications Fund. We, like our peers in the investment industry, invest enormous amounts of intellectual, philosophical and practical energy into product development and the expansion of our offerings to the intermediary market. We do not take such deci-sions lightly, and always do so with a mind to providing investors and their advis-ers with useful, simple and appropriate investment alternatives, clear in our under-standing of our responsibility to all parties involved.

We never create funds based upon short term opportunities, by trying to ‘second guess’ or predict market movements. To do so would not only be fraught with dan-ger for all concerned, but would be contrary to our own established investment and business management processes.

Chris Cuffe

Chief executive officer

Colonial First State Investments