Niche futures fund manager Momentum Pacific Asset Management has decided to call it a day in New Zealand and is to wind up its two retail funds.
The irony of this decision is that the present volatile market conditions are exactly the ones that favour futures or trading funds.
"It is an unfortunate sense of timing," Momentum managing director Ian Galli says.
With Momentum's departure there are just four futures funds left; the GAM Multi-Trading Fund promoted by Tower Funds Management, two from Toronto Unit Trusts and one run by Auckland trader Robert Holroyd.
A number of advisers who use these funds say they have made excellent contributions to portfolios in recent times.
Galli says the two funds being closed have less than $1.5 million under management, way down from their 1994 zenith of $12 million.
As the funds were so small they were just not economic to run, especially when all the fixed costs such as disclosure and administration are accounted for, he says.
"Despite our best efforts we have been unable to raise enough money to run a retail funds management structure because the compliance expense is just too high," he says.
The other contributing factor to Momentum's demise is the changing face of the distribution network.
When Momentum set up shop in 1992 there were a significant number of so-called independent investment advisers who would, or could, sell the funds. Now many of these firms are tied into wrap accounts or master trusts that don't include Momentum.
Galli says Momentum has also, "had difficulty convincing people there is a need for them (futures funds) in their portfolio."
"Major advisory firms and institutions have few, if any, understanding (of futures funds). They are not willing to learn about them or use them," he says.
Momentum's unitholders can expect to have their money back next month.
Niche futures fund manager Momentum Pacific Asset Management has decided to call it a day in New Zealand and is to wind up its two retail funds.