Closure of ASB savings funds baffles investors

ASB investors say they are frustrated the company has written to them about the closure of 10 of its investment funds without explaining why they are being shut down.

But the bank says it has received positive feedback from investors who are keen to move into more modern alternatives.

ASB wrote to investors last week telling them about the closure of its ASB Easyplan Retirement Savings Scheme and nine other investment trusts.

In its letter the ASB said it had assessed its investment product range and decided some were no longer "delivering to best meet our customers' needs and investment goals".

Investors were told to expect another letter in the next few weeks offering alternative options as well as details of the wind-up process and when they could expect to get their money out.

But one Auckland investor, who has money in five of the nine trusts, said the letter raised alarming questions.

"I expect a major trading bank to be transparent and accountable to loyal customers. How can ASB expect me to reinvest my hard-earned money with the bank when it won't tell me what is happening with my current investment?"

Another investor in the ASB's EasyPlan scheme said he felt relieved it was being wound up but wanted more explanation as to why.

ASB chief executive relationship banking, Stewart McRobie said it was closing the products because they had become out of date since KiwiSaver and the portfolio investment entity regime in July 2007.

"Essentially we are looking at exiting what are really legacy products."

"It's not only KiwiSaver but the advent of the PIE regime, together they have made some products less competitive than previously."

ASB was not the only firm to close down investment products after KiwiSaver and PIE changes, he said.

McRobie said the money involved was "a lot" but could not give the exact amount or the number of investors involved.

He referred questions to the ASB's media manager who said the figures were not publicly available.

The spokeswoman said the amount of money in the funds had been reducing over time as investors had transferred to more modern alternatives.

"For this reason, the feedback we have received to date has been positive - investors are pleased that ASB is providing them with new opportunities," she said.

The 10 trusts would be wound up by the end of September. An 11th trust called the ASB New Zealand Property Trust was not being wound up because its underlying investment in the AMP Capital NZ Property Fund was frozen.

McRobie said between now and September investors would be provided with a range of options for reinvesting their money.

The closure of the trusts follows a decision by the bank to make six of its investment brokers redundant.

CLOSING DOWN

*ASB Easyplan Retirement Savings Scheme.
*NZ Mortgage Income Fund.
*ASB Residential Mortgage Trust.
*ASB Money Market Trust.
*ASB Diversified Income Trust.
*ASB NZ Fixed Interest Trust.
*ASB World Fixed Interest Trust.
*ASB NZ Shares Trust.
*ASB World Shares Trust.
*ASB Emerging Markets Trust.