Business as usual for BT despite market timing scandal
Research houses have taken differing views on BT following allegations of market timing by some staff at its international shares manager Putnum.
Tuesday, November 11th 2003, 11:14PM
However, the research house has no intention of changing its star ratings for BT’s New Zealand domiciled funds. Part of the reason for this is that Morningstar only does quantitative ratings in New Zealand now.
Meanwhile, local research house FundSource says in a note to its clients that BT should follow the lead set by other managers who use Putnam and shift their money into an index fund while the issue is being solved.
BT Funds marketing manager Gordon Noble-Campbell says there is no intention to follow that move as BT’s funds are managed on a discrete mandate basis.
He says the reasons BT chose Putnum, such as process and style, still hold true.
The market timing scandal involves just a few people, as opposed to being something which is widespread in the group.
He says BT’s relationship with Putnam "is very much business as usual".
"For example, during November we will be undertaking a series of national adviser presentations in New Zealand featuring Paul Warren, chief investment officer of Putnam's global core equity team who will provide his thoughts on the key drivers impacting on the outlook for global equities markets."
While it is business as usual BT has said in a statement that it is “very disappointed” by what has happened.
"BT is committed to ensuring that the interest of our investors is put first. As one of Putnam ’s largest international clients, we have been very active in the last few weeks in ensuring that Putnam enforced change quickly, and we made it clear that we believed an independent review of their procedures was appropriate."
Morningstar makes it clear in its report that BT’s investors have not been harmed by the scandal.
"BT’s funds are managed as a separate mandate by Putnum," it says. "There is no suggestion that BT has itself acted improperly at all in this matter."
However, Morningstar says that if Putnum hadn’t taken the steps it has (management changes and sackings) it "would have had no choice but to recommend a sell on BT’s international funds."
It considers the allegations of market timing as "serious breaches of fiduciary duty."
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