“Which is disappointing by the way, absolutely disappointing. Once we are absolutely certain what happened with Signature Bank, we will take our lessons from it.”
Fisher’s growth and conservative KiwiSaver funds had between 0.2 per cent and 0.6 per cent exposure to Signature Bank.
“To put that in perspective, if you were a customer in a growth fund with $50,000 invested in your KiwiSaver growth fund at Fisher Funds, you would have lost around $320.”
Dickie said Fisher Funds was broadly underweight in the financial sector.
“The other 99 per cent of the portfolios are doing just fine.
“Within some of the single sector funds, we have no banking exposure at all.”
The Herald understands Fisher Funds staff were due to meet with Signature Bank and First Republic Bank executives in the US last week.
However, regulators stepped in to take over Signature Bank and Silicon Valley Bank (SVB) in the days before, after depositors withdrew US$42 billion from SVB in eight hours over concerns about its financial stability and mismanagement of assets.
The fallout had now reached Europe, with investor sentiment infecting Credit Suisse stock, leading to a $3b swiss franc buyout of the firm by rival Swiss investment bank UBS - about a 60 per cent discount to its closing price last week.
“A ripple somewhere causes ripples elsewhere, so that [Silicon Valley Bank collapse] probably did break Credit Suisse’s back, sadly.”
Dickie “had a few friends” who worked for Credit Suisse in Hong Kong and London - it was his first employer in the finance industry when it once operated as First NZ Capital in New Zealand.
“It was kind of a bastion of strength in the GFC ... The rot sort of set in in the last few years when the bank made a few missteps.”
The merged entity of Credit Suisse and UBS would have US$5 trillion worth of assets under its belt.
Fisher Funds did not own any Credit Suisse stock, nor was it a bondholder.
The Swiss Government engineered the Credit Suisse UBS buyout, waiving the need for shareholder approval and rendering US$17b of bondholder debt worthless.
Traders had been selling AT1 bonds, also known as contingent convertible bonds, this week as a result, Dickie said.
He said this banking crisis, complete with government backstops and buyouts, reminded him of the 2008 global financial crisis, however, there were a number of differences, specifically the quality of banking regulation globally.
“We had this piecemeal, sticky plaster approach back then ... That’s very, very different now.”
More banking regulation was likely in the US, he said, specifically the size of deposit insurance which was currently capped at US$250,000, and the management of assets versus liabilities.
Listen to the full podcast for more on the last month in markets
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