Investors in the former Renouf Asset Management New Zealand and International equity funds are mad over huge unit price writedowns, of up to 41 per cent, due to tax losses.
Investors in the former Renouf Asset Management New Zealand and International equity funds are mad over huge unit price writedowns, of up to 41 per cent, due to tax losses.
Their anger has been amplified by a redemption freeze, poor communications and several changes in fund manager since March 31.
The situation is understood to have got to a stage last month where a group of unitholders had requested a special general meeting of the funds to change the manager.
The story goes back to earlier this year (see story) when Renouf sold its funds management business to Direct Funds Management. Although the business changed hands some of the same people remained involved in the business.
Following the ownership change Direct sacked David Ross as manager of its New Zealand and international equity funds. Direct director Nigel Wynn was to take over the New Zealand equity mandate and Dresdner RCM Global Manager (which recently announced it was buying Jardine Fleming's Masterpiece fund range) was to take over the international mandate.
However, the situation has moved on and Colonial First State is now being appointed the manager of both funds.
A number of advisers spoken to by Good Returns are disappointed at the changes and the way they have been communicated.
Also, the portfolios of both funds have now been liquidated and the proceeds will be reinvested in portfolios which mirror Colonial's Global Share Trust and its Tasman Shares Trust.
It appears the main reason for creating duplicate funds relates to tax losses.
Because of the poor performance of both trusts they have built up significant tax credits. In the case of the International fund the losses are 33.72 cents per unit (cpu) and for the New Zealand equity fund 20.65 cpu. The manager has recommended to the trustee (Perpetual Trust) that the funds' accounting policies be changed resulting in a fall in unit prices.
Under the changes the tax losses would not be included in the unit price because of their size.
Under the change the International fund's price will fall 41 per cent from 90 cents, as at March 31 to 69c and the NZ equity fund will fall 22.7 per cent to 48.5c.
"It was our view that this level of intangible asset was too high to retain in the valuation of the units on a weekly basis," director Stephen Underwood says in a letter to advisers.
Besides being angered by the manager changes and the tax losses, advisers are concerned that a unit redemption freeze was placed on the funds in April, however not communicated to unitholders. Good Returns has been unable to contact Colonial First State chief executive Bruce Abraham and Direct director Stephen Underwood.
Earlier stories Renouf sold Change of manager
Investors in the former Renouf Asset Management New Zealand and International equity funds are mad over huge unit price writedowns, of up to 41 per cent, due to tax losses.