KEY POINTS:
Investors in ING's frozen funds will be surprised to hear the fund manager has received the top accolade from ratings company FundSource.
FundSource, which is owned by the NZX, has named ING as its 2008 Fund Manager of the Year.
ING also took out the top spot for
the New Zealand cash sector, New Zealand equities, New Zealand fixed interest and diversified defensive category.
The awards are judged over the year to June 30.
ING froze its Diversified Yield and Regular Income funds in March this year citing problems in the credit markets.
Around 8000 investors have $521 million locked up in the funds which were promoted as being as safe as bank deposits through ING's 49 per cent owner ANZ National Bank.
Fundsource says nominations are based on a disciplined approach to investment management and delivery of consistent performance.
The winners are then selected on their ability to deliver superior risk adjusted performance relative to their peers.
It seems hard to believe ING has done this in regard to these frozen funds but perhaps that is where the peer performance factor comes in.
Few fund managers have been left unscathed by problems in the credit markets and massive drops-offs in the equity markets this year.
Fellow category winners have suffered their own problems.
Tower, which took out the diversified balanced category, announced it would close its $242 million Mortgage Plus fund in April.
Likewise international equity category winner Guardian Trust was forced to suspend redemptions from its $249 million Guardian Mortgage fund in July.
Diversified Growth sector winner AMP froze withdrawals on its Capital NZ Property fund in August and AXA, the winner of the international fixed interest category, followed soon after, suspending redemptions for institutional investors in its Mortgage Backed Bond fund in August.
FundSource business head Yvonne Davie acknowledges the tougher conditions may mean it has to rework its awards evaluation system.
The FundSource Awards nominee selection process is transparent. However, current market conditions are unprecedented and this may require a re-evaluation of awards criteria to ensure a fair reflection of overall fund manager performance is delivered ... , she says.
Investors should also remember that the awards do not cover all fund managers in New Zealand, only those who pay for a rating from FundSource.
Many of the smaller fund managers, some of which have very good performances, are not included as they balk at paying the fees FundSource commands for its services.
AUSSIE WOES
In Australia where mortgage funds have been excluded from its guarantee scheme, investors have been pulling their money out of the funds in droves causing a massive clampdown on redemptions.
According to ratings firm Morningstar, more than 50 funds have now suspended withdrawals including Australian fund management giants Perpetual and AXA and, yesterday, Colonial First State.
More than A$20 billion from 100,000 investors is thought to have been affected and more mortgage funds are expected to follow suit by freezing redemptions as investors rush to put their money in the deposit guaranteed banks.
The Rudd Government is said to be pondering its position on the funds but many see them as too risky to be covered by the government guarantee.
Unfortunately some New Zealand investors are also likely to have been caught up in the fund freezes.
According to Morningstar Australian Unity mortgage funds, Challenger High Yield, Challenger Howard Mortgage, Challenger Hybrid property and Perpetual mortgage funds were also marketing to Kiwi investors.
Morningstar senior research manager Chris Douglas says the ironic thing about investors pulling out now is that with the official cash rates and bank deposit rates dropping, the returns on the mortgage funds are getting more attractive.
The outflows just show the level of fear in the market, he says.
New Zealand investors worried about money invested in Australian mortgage trusts should contact their financial adviser or the company directly.
MACQUARIE FORTRESS
Macquarie Fortress note holders also received more bad news this week as investors were told the notes are now valued at zero and literally worthless.
In a statement to the stock exchange, director Peter Lucas said the deterioration in the financial markets had continued to affect the traded prices of US senior loans in the Fortress portfolio.
Presently, the cumulative market value of senior loans in the Fortress portfolio is below the total debt facility balance.
As a result, Macquarie Fortress Investments estimates that the NAV [net asset value] as at October 17 2008, was zero cents per note.
The statement goes on to say that investors won't be expected to pay money to Macquarie if there is a shortfall between the debt facility balance and the realised value of the senior loans.
That's some consolation for investors who were hoping to get a return out of their investment rather than paying more for it.
At least there is time on their side. Macquarie refinanced the notes in April for a period of eight years until 2016.
Lucas says the final return to investors will depend on the default and recovery rates of the senior loans in the portfolio and there have been no new defaults at this stage.
The Macquarie Fortress notes were issued at $1 each in May 2005.
Around 1000 New Zealand investors are thought to have $30 million invested in them.
PINS MELTDOWN
PINs 2005-1 series investors have been told their investment has suffered another liquidation event. The event occurs when the underlying investment funds stop paying out money and means the fund manager must sell up all the investments in the portfolio.
But according to an earlier statement, the series was already in the process of selling up its credit portfolio after a liquidation event on March 18. The underlying funds are invested in credit products and would have been hit by the same problems that ING's frozen funds are suffering from so it's unlikely the series will see any money back soon.
At least investors have a 100 per cent capital guarantee on their investment to fall back on even if that means they won't see any money back until 2013 when the investment matures.
KIWISAVER REPORT
The Inland Revenue has reported back on its first year of KiwiSaver with Michael Cullen using it as an opportunity to crow over the success of his retirement savings scheme.
Figures show KiwiSaver was forecast to have 346,000 members in the first year about Labour announced the extra incentives for it in last year's Budget. But actual numbers showed 716,637 had joined.
But one thing National does seem to have right about its KiwiSaver policy is the plan to drop the minimum contribution rate from 4 per cent to 2 per cent.
Research shows the main barrier to people joining KiwiSaver is the 4 per cent contribution level. People can sign up paying just 2 per cent at the moment but have to get their employer to also contribute 2 per cent.
Employers of low income earners of up to $52,000 per annum will have this covered by the Government's employer tax credit. But it seems the 2 + 2 message hasn't really got through to the public.
The report also uncovered some surprises. Almost half of investors have made an active choice about which scheme they are in, vetoing earlier assumptions that very few had actually made a choice.
Less surprising is that those who have opted to join KiwiSaver tend to be older (closer to retirement) and wealthier. While automatic enrolees tend to be younger and those who have opted out completely tend to be poorer.
The 855,443 people who have now enrolled are around one quarter of the eligible population of 3.3 million. According to the IRD, 1,629,673 females are eligible and 1,661,561 males are eligible but there are also 14,141 people who can sign up but for whom the IRD doesn't know their gender.
Reporting on itself, the IRD said it received 488 KiwiSaver complaints in the first year, just 7 per cent of total complaints it received. Of those nearly 30 per cent related to declined opt-out requests, 20 per cent to refunds following opt-out and 15 per cent to delays in funds transfer.
