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What the research houses have to say about Consumers' list of t

There's been much discussion about Consumers' list of 21 top managed funds. We compare its list with what IPAC and Morningstar say about the funds.st

Monday, October 18th 1999, 12:00AM

by Philip Macalister

The Consumer Institute's recent "test" of managed funds has been a hot topic of conversation recently, with not everyone agreeing on the methodology used.

The institute's test involved establishing a set of criteria that included things such as performance, fund size, fees, staff continuity and access. All the funds on IPAC's database were then screened against these criteria. In the end Consumer declared only 21 out of more than 250 funds met its criteria.

Much of the concern has centred around the shallow nature of the "test" and the worry that Consumer readers will look at the list then go and buy those funds on the strength of the article.

Good Returns decided it would be interesting to compare all the funds on the Consumer list against the ratings and recommendations of the two retail managed fund research houses IPAC Securities and Morningstar.

The results were a mixed bag.

Two of the funds on Consumer's list are not recommended by IPAC, and three of the funds now fail the performance criteria set out in the test. To pass the performance hurdle funds had to have either a four star or a five star rating, however three of the funds, have only three stars.

Morningstar does not rate three of the managers with funds in the list and these managers account for more than half of the 21 funds. The other managers in the report have either a four or a five star rating from the firm.

On the product side there are four funds each with either a five or a three star rating, and two with a four star rating.

The conclusion from this is that some of the funds recommended by Consumer are only rated as around average by the research houses.

FUND

IPAC STATUS

IPAC STARS

MORNING-STAR MANAGER RATING

MORNING-STAR FUND RATING

GROWTH FUNDS

Armstrong Jones Australian shares

Recommended

5

5

5

BNZ Active Growth Trust

Recommend for medium to high risk investors

5

4

3

Guardian Small Companies Fund

Watching brief

5

4

4

NZ Funds Capital Growth Trust

Not rated*

5

NYR

NYR

NZ Funds Global Equity Trust

Not rated*

5

NYR

NYR

NZ Funds Global Property and Infrastructure

Not rated*

5

NYR

NYR

NZ Funds NZ Equity

Not rated*

5

NYR

NYR

NZ Funds Property and Infrastructure

Not rated*

 

NYR

NYR

Public Trust Capital Growth Fund

Not recommended

5

NYR

NYR

Tower Global Fund

Recommended

5

4

3

WestpacTrust International Equity Trust

Recommended

5

5

3

BALANCED FUNDS

Armstrong Jones Balanced fund

Recommended

3

5

4

BNZ Balanced Fund

Recommened for low to medium risk investors

5

4

3

NZ Funds Balanced Fund

Not rated*

5

NYR

NYR

Public Trust Balanced Fund

Not recommended

3

NYR

NYR

Tower Multi-sector Fund

Recommended

4

4

5

CONSERVATIVE FUNDS

Armstrong Jones Secure Income Regular

Recommended

5

5

5

BNZ International Bond Fund

Highly recommend as part of balanced portfolio

5

4

5

NZ Funds Global Hedged Bond Trust

Not rated*

5

NYR

NYR

NZ Funds NZ Fixed Interest Trust

Not rated*

4

NYR

NYR

Royal & SunAlliance NZ Fixed Interest

Recommended

4

NYR

NYR

* IPAC does not make recommendations on NZ Funds products as it is an associated company


NYR = These companies and their funds have not been rated by Morningstar.

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