Huljich corrects KiwiSaver performance numbers

Huljich Wealth Management has confirmed reports that questioned some of its KiwiSaver performance numbers and plans to update its prospectus and clarify the published accounts.

Friday, February 19th 2010, 7:59AM 10 Comments

The clarification comes after it was alleged assets were transferred into the funds at lower prices than their actual value.

In a comprehensive press release Huljich has explained what happened and how much managing director Peter Huljich put into the funds.

Huljich has promoted its funds on performance and says the updated accounts make little change to its ranking against other KiwiSaver funds.

Peter Huljich says the amendments will clarify that certain income in the six months to March 31, 2008 and 12 months to March 31, 2009 was not investment income, but funds contributed by him personally on two occasions as compensation for the manager investing overweight or not diversified to the extent required.

The events arose in the early days of the funds, partly due to the small size of the funds at that time. The amendments also disclose profits from shares made available to the KiwiSaver Scheme by the manager at the discounted price available to the Manager under sub-underwriting agreements, which was less than market value.

In the six months to March 31, 2008 the compensation provided was $8,573 and in the 12 months to March 31, 2009 the compensation was $141,535.

"I provided compensation because I felt morally responsible for the two particular investment decisions, which proved disappointing. I believed compensation was in the best interests of our members. There was no intention of boosting the performance of the funds through these transactions. "

"I would like to assure our members that we will continue to focus on maximising returns and that these amendments make no difference to the actual amounts of previously advised returns they received."

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Comments from our readers

On 19 February 2010 at 9:22 am Investor said:

Finally a fund manager that takes responsibilty for its investment decisions and displays a duty of care to its investors' bottom line. Do they have public managed funds available?

On 19 February 2010 at 12:54 pm Doubting Dan said:

Investor - your comment sounds like something straight from the Huljich PR Department... I think the fact that the compensation wasn't mentioned as a practice of Huljich's at the time suggests that this has nothing to do with duty of care but instead seems a lot more like business preservation. A fund manager that takes responsibility like this with pure intentions and unquestionable morals would have made the most of it from a marketing perspective at the time and not retrospectively when questioned through the media and by the relevent regulatory authorities.

On 19 February 2010 at 4:17 pm Wayne Ross said:

This is a great example of why the govt's limp response to the Taskforce recommendations completely misses the mark when it comes to investor education and restoring confidence.

Read the Huljich "plain english" promo material and you would clearly believe you are investing across a diversified mix of asset classes and securities. Very few would have realised they can also spike returns by related party lending, sub-underwriting (for a fee presumably) and when it all turns bad by throwing in a few extra $.

Where were the trustee and Sec Com when all this was going on? Asleep at the wheel it seems until the recent media attention.

On 19 February 2010 at 4:22 pm Mycenius said:

Indeed DD - I agree. It's easy to claim the moral high ground in these situations AFTER you have been forced to come clean by someone else questioning your facts. They were sneaky and are just trying to put a 'spin' on being caught out...

On 19 February 2010 at 5:09 pm Yeah right! said:

So the fund made "two particular investment decisions, which proved disappointing" for which Peter felt obliged to compensate the fund. If he had not compensated the fund, its performance would have been worse. How can he say that there was no intention of "boosting" performance? Surely that was the exact objective of the compensation?

On 19 February 2010 at 10:12 pm Denis said:

Let me get this straight - in the space of one *day* you can withdraw a Prospectus because someone found out about some dodgy goings on. And then on the same day at 4.56pm you can register a shiny new one, allowing you to carry on trading as if nothing has happened?

Shouldn't the regulators be poring over the new Prospectus? Going over it with a fine tooth comb? Calling the provider to account? You know, things that might protect the public?

On 19 February 2010 at 11:38 pm anon said:

This is fantastic news - its a great precedent set by Peter Huljich. Anytime there is a "disappointing" return, investors can expect Peter to dip into his pocket to top up the fund. Nice......

On 20 February 2010 at 7:49 am Fund Exec said:

Having participated in the NZ Funds industry at a senior level, unfortunately I can only conclude that Huljich fiddled the fund to boost performance, got caught with his hand in the cookie job and is making a best attempt to save face. What is a larger issue is the fund industries propensity to manage fund performane based on fund closures, new funds, timing of reporting and asset valuations. Personally I stick with index funds because you know you are not going to be caught up in all that messy greed.

On 20 February 2010 at 7:47 pm Kimble said:

hey anon, i assume you are joking. If not, have i got a bridge for you!

On 25 February 2010 at 8:26 am Independent Observer said:

Wayne Ross has hit the nail on the head. These sorts of games should not be allowed to occur - if our industry is sincere about protecting clients. It again goes to prove that the NZ regiem is a joke... and that bigger catastrophies in the Kiwisaver space are able to occur

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