KEY POINTS:
Almost every fund manager I know is 'award-winning'.
This is not surprising. New Zealand has a tiny funds management industry and two ratings agencies - FundSource and Morningstar - that dole out a slew of awards every year.
So at any time there are likely to be
two NZ 'fund managers of the year' - as in world boxing there is very rarely a unified titleholder. Current, Tyndall is the Morningstar champ while last week FundSource, controversially, handed ING its top gong.
ING's win surprised many in the industry - and drew comment in the press - because the manager has been responsible for two of the worst product disasters over the last year. Collectively, ING's Regular Income Fund and Diversified Yield Fund raised over $500m from retail investors creating New Zealand's biggest direct exposure to the now-dysfunctional CDO (or collateralised debt obligation) market.
ING has rightly taken a pasting over the RIF and DYF. The funds are now frozen and have halved in value, according to ING's official valuation (although some observers claim that is overly optimistic).
FundSource stood by its man, though, saying, with some justification, that just about every other fund manager has also frozen funds this year (see Axa's move yesterday, for example).
But nobody with any sense should take the 'fund manager of the year' gong too seriously. While ratings agencies are supposed to provide an independent evaluation of fund managers they face some constraints in achieving objectivity.
For one, rating firms tend to be understaffed, perennially losing talented staff to more lucrative jobs with fund managers. As well, the business models of FundSource, Morningstar and the like are inherently conflicted - the industry rather than the end-user pays for the rating.
This conflict is not limited to New Zealand or funds management. For a great insight into how the CDO explosion was sparked by some questionable ratings agency behaviour see the recent US Financial Times story 'When junk was gold'.
I reckon it's award-winning stuff.
David Chaplin
Pictured above: The North City Vikings celebrate their Wellington Rugby League grand final win earlier this year. Photo/ Andrew Bonallack
