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Poor Australian share performance spurs downgrade

BT Australia's star rating downgrade has little impact in New Zealand.

Friday, January 12th 2001, 7:13AM

by Philip Macalister

BT Funds Management in New Zealand says it's disappointed that research house Morningstar has downgraded BT Australia from a four star manager to a three star one.

"We are not comfortable with it," BT NZ vice president Mike Newton says. "We don't like it at all."

Newton says the downgrade is primarily due to an under-performance in the Australian equities sector.

He says the portfolio managers had taken a long-term view on the market and have been short on banking stocks. However, the fund has significantly underperformed the indices as banking stocks have been strong performers in recent years.

The manager downgrade illustrates the importance of performance in the rating process and the size of the BT's Australian share portfolio.

While Morningstar's Star Ratings are based on both quantitative and qualitative factors, past performance is important. When the rating is calculated the performance of all of a manager's funds are added up together and put into the rating on fund weighted basis.

Because BT's Australian share fund exposure is so big it has influenced the outcome of the manager rating.

The impact of big funds on a manager's rating was highlighted in November when Morningstar decided to move Macquarie to a not-yet-rated status. The main reason behind this is that it had just one fund, its Gilt-Edged Access cash account, and the performance of this significantly impacted the ratings process.

The BT Australia downgrade doesn't affect BTNZ. However, a reasonable amount of money is directly invested into BT Australia funds, and some of the New Zealand funds invest into BT Australia funds.

"The impact on us is not great," Newton says.

BTNZ would be "very unhappy" if Morningstar decided to downgrade its manager rating.

"(Australian shares) is a small part of our business," Newton says as only a maximum of 10% of the New Zealand equity fund can be invested into Australian shares.

You can read Philip's blog here: http://www.goodreturns.co.nz/blog/

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  • Naylor: Time to rename advisers
    “Thanks Mike. I wonder if the extensive consultation process involved consumers - who still lump all industry components into...”
    5 hours ago by Pragmatic
  • Naylor: Time to rename advisers
    “@keith: agree, that was suggested to the then minister, simon power. @m naylor: think outside the box. my suggestion then...”
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  • Naylor: Time to rename advisers
    “Would it be out there if we had a designation "Insurance Adviser". I know this might be a radical departure from AFA & RFA...”
    6 hours ago by Ron Flood
  • AMP: Concern over advice quality
    “Hi Mike Thanks again for all that. On your last points perhaps the best way of ensuring “professional, client first advising”...”
    7 hours ago by Brent Sheather
  • Naylor: Time to rename advisers
    “Pragmatic - the current system of regulation was the product of an excellent, extensive process of consultation. One conclusion...”
    8 hours ago by Mike Naylor
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Lender Flt 1yr 2yr 3yr
AMP Home Loans 7.24 5.79 6.39 6.65
AMP Home Loans $200k+ 7.14 5.69 6.29 6.55
AMP Home Loans LVR <80% - - 5.85 6.29
ANZ 6.74 6.15 6.49 6.49
ANZ LVR > 90 6.74 6.65 6.99 6.99
ANZ Special - 5.75 5.99 -
ASB Bank 6.75 6.09 6.40 6.65
ASB Bank Special - - 5.99 6.19
BankDirect 6.75 6.09 6.99 6.65
BankDirect Special - - 5.99 6.19
BNZ - Classic - - 5.99 6.19
Lender Flt 1yr 2yr 3yr
BNZ - GlobalPlus 6.74 5.99 6.39 6.59
BNZ - Mortgage One 7.15 - - -
BNZ - Rapid Repay 6.74 - - -
BNZ - Std, FlyBuys 6.74 5.99 6.39 6.59
BNZ - TotalMoney 6.74 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.45 5.90 6.50 -
Credit Union North 6.45 - - -
Credit Union South 5.75 - - -
eMortgage 6.04 6.15 6.69 7.19
Finance Direct 6.10 6.45 6.69 7.10
Lender Flt 1yr 2yr 3yr
First Credit Union 6.45 - - -
General Finance 5.95 6.25 6.50 7.10
HBS Bank 6.15 5.85 5.99 6.19
HBS Special - - - 5.89
Heartland 6.70 7.00 7.25 7.85
Heretaunga Building Society 6.70 6.00 6.50 -
Housing NZ Corp 6.74 5.99 6.39 6.59
HSBC Premier 6.84 5.95 5.95 6.39
HSBC Premier LVR > 80% - 5.75 5.75 5.75
HSBC Special - - - -
ICBC 6.75 5.99 6.39 -
Lender Flt 1yr 2yr 3yr
Kiwibank 6.65 5.79 6.39 6.65
Kiwibank - Capped 5.65 6.50 - -
Kiwibank - Offset 6.55 - - -
Kiwibank LVR > 80% - - 5.89 6.19
Liberty - - - -
Napier Building Society 5.80 6.00 6.70 -
Nelson Building Society 6.95 6.15 6.60 -
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Perpetual Trust 7.70 - - -
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SBS Bank 6.15 5.85 5.99 6.19
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SBS Bank Special - - - 5.89
Silver Fern 5.95 6.10 6.55 7.05
Sovereign 6.85 6.09 6.40 6.65
Sovereign Special - - - 6.19
The Co-operative Bank 6.70 5.95 5.99 6.19
TSB Bank 6.74 5.95 6.19 6.30
TSB Special - - 5.79 -
Wairarapa Building Society 6.20 5.75 5.95 -
Westpac 6.59 6.09 6.39 6.65
Westpac - Capped rates - 6.74 6.99 -
Westpac - Offset 6.59 - - -
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Westpac Special - - 5.99 6.19
Median 6.70 6.00 6.39 6.57

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