By ELLEN READ
It has taken eight months but the stock exchange has won over the country's fund managers to its NZSX50 index.
More than half have adopted the new index as their performance benchmark, says researcher FundSource. A survey in April showed none was planning to take up
the index.
"The turnaround is very interesting and it shows the acceptance of the 50 for professional investors," said FundSource business manager Tim Anderson. "It really is positive for the exchange."
Reasons given for the change of heart were that the NZSX50 is a broader, more robust measure of the local market, that new funds are benchmarked against it making it sensible for current funds to do likewise, and that the alternative NZSX40 index will cease being published by the exchange next March.
The 11 fund managers interviewed by FundSource have about $6 billion invested in local shares - 15 per cent of the local market capitalisation.
Anderson said the NZSX50 index, being free float, was more representative of the investible market.
"Especially when you look at things like Pacific Retail Group, Air New Zealand and those sorts of companies that have very high concentrated ownership," he said.
"Managers or investors simply can't get at that sort of stock. We expected managers to come across to the 50. We didn't have a time frame for it but we were a little surprised by the last survey when managers said that they weren't even thinking of it."
He put the conversion down to good work on the part of the exchange in communicating with fund managers and listening to their concerns.
"The 40 has been superseded," he said. "The issues around the 50 are manageable so fundamentally I think it's a better index."
Those managers who decide to stick with the NZSX40 will have to buy information on that index from the exchange from April.
