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Colonial First State Investments looks as though it has retained about 80 per cent of the $125 million invested in 15 funds it is rationalising. Put another way it has lost about $25 million of the $125 million which was invested in Prudential's unit trust range and six Colonial funds.
The rationalisation, announced in May, stems from Colonial's purchase of Prudential last year. All the Prudential funds are being closed and six Colonial funds are being wound up because they don't fit within CFSI's investment philosophy.
The funds which are being closed are international sector trusts, plus some New Zealand-only funds. CFSI believes the New Zealand market is too small and investors have to consider Australasia as their local market. Also it's a non-believer in the concept of sector funds.
CFSI froze the funds three months ago and gave unitholders until yesterday (August 10) to decide if they want to switch to new funds or cash up.
CFSI chief executive Bruce Abraham says about 90 per cent of the $45 million invested in Colonial products has been retained, and about three quarters of the $80 million invested in Prudential unit trusts has been shifted to the new range of funds.
He is disappointed CFSI hasn't retained more of the Prudential money, and he aims to win it all back.
Abraham says Prudential had been experiencing "huge" cash outflows from its funds for some time, and it had proved difficult to stem that trend.
"It's very hard when the trend's against you, to put your finger in the dyke," he says.
While investors' deadline for making a decision on whether to stay with CFSI or not has passed the company is still waiting to hear from a number of unitholders.
Abraham says the trustee has given CFSI approval to keep processing transactions beyond the deadline.
The strike price for exiting the old funds and entering the new funds will be set on Monday. Full details of the rationalisation will be available on Tuesday.
Abraham says the company has learnt a lot about its customers and their investment behaviour in the rationalisation exercise. One thing they discovered is that the rationalisation affected 9000 investors, not 7000 as originally thought.
For earlier story, Colonial First State takes the hard option, click here
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