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Time to be more proactive

Wednesday, February 7th 2001, 12:20PM

Two issues that have enjoyed considerable coverage in the mainstream business press recently are, potentially, salient warnings to the savings industry, whether it be fund managers or advisers.

The first is that thorny old issue of fees and the second is the future of the New Zealand Stock Exchange.

Fees have hit the headlines in the lead up to Contact Energy's annual meeting. Readers will remember that last year Contact directors were unsuccessful in passing a motion to increase their fees as they were challenged on a technicality by a small shareholder, and they lost.

In the lead up to this year's meeting the directors again sought to win shareholder approval for a significant fee rise, but this time they chose to withdraw the motion in advance of the meeting because of vocal shareholder disapproval.

There's two salient points in this.

Investors will rebel when they see their investment performing poorly, yet the managers continue to get rewarded handsomely.

A Contact situation could occur in the managed funds industry following a year like 2000 when performance was in many cases negative, yet managers are still well remunerated.

Another of the outcomes of the Contact drama is the call for an association to be formed to represent the interests of the mom and pop investors.

This is a great gesture, but it already faces considerable hurdles. To be effective it needs strong resources, such as funding and organisational capabilities, and it also needs intellectual grunt.

A substitute for a small shareholders association could be a grouping of institutional investors and fund managers. Such associations are common overseas, but New Zealand managers have never got past informal discussions about creating such a grouping.

The need for the professional funds management industry has become even more obvious against the backdrop of discussion about the future of the New Zealand Stock Exchange.

Many fund managers have, quite rightly pointed out, that the poor performance of the sharemarket is not so much the exchange itself, but the governance and management of the companies listed on the board.

Managers who adopt the active approach to looking after money love telling us about how many company visits they do each year. But what do they do on these visits? Do they just listen to what the company has to say, or do they also put pressure on them to pick up their act in areas of management and governance?

Clearly some managers like Arcus have made a point of telling the world that they are not afraid to tell management how poor a job they are doing, and others, such as BT Funds Management, take a pro-active approach, albeit less public.

Maybe it is time for fund managers to pool their resources and be far more proactive in this area. After all they would be looking after investors' best interests.

Such a move may also be a good catalyst to improving the overall performance of the New Zealand sharemarket.

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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 -
NZ Home Loans 6.85 6.09 6.40 6.65
Perpetual Trust 7.70 - - -
Resimac 6.59 6.35 6.58 6.77
SBS Bank 6.15 5.85 5.99 6.19
Lender Flt 1yr 2yr 3yr
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 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - - 5.99 6.19
Median 6.70 6.00 6.39 6.57

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