Broadbase Egmont ran an advertisement last November inviting people to attend a seminar for the OM-IP Strategic Series 2. In the ad it used information from the investment statement which said the series has been built on a "core investment strategy that has delivered an average annual return of 21.2 per cent since December 1990."
However, fellow adviser Warwick Funnell of Wanganui Investment Brokers complained to the ASCB saying the ad was misleading as other OM-IP series since 1990 have not produced returns anything like the 1990 series.
He said the one prompted in June 1998 had only produced a return of 7 per cent in 17 months, and the January 1999 series had made a loss of 8.68 per cent in about 10 months.
Ords says there have been three different investment strategies offered since August 1997, and each had different strategies as outlined below.
|
Series name |
Strategy |
Results |
|
OM-IP 220 Three funds First launched Aug 1997 |
Core AHL Diversified Programme (London) with smaller allocation to Glenwood Multi-Strategy Program (Chicago) |
|
|
OM-IP 320 Diversified Ltd Started Dec 1998 |
Equal allocations two three different managers, namely AHL, Glenwood and MRV US Equity Program (New Jersey) |
Underperformed |
|
OM-IP Strategic Ltd |
Core manager is AHL with smaller allocations made to ED&F Man Strategic Portfolio |
|
Ords says it is not appropriate to compare the performance of the first two series (OM-IP 220 and OM-IP 320) with the third one as they employ different investment strategies.
Instead the third series is being compared to the AHL Diversified Program which has a history of more than 15 years and a compound annual return of 21.2 per cent.
"We consider the performance of the core AHL Diversified Program to be material information for potential investors in the new OM-IP Strategic Fund," Ords says.
The board declined to uphold the complaint, and warned the advertiser to be more careful in future.
"Although the advertisement may be construed by some as confusing it was insufficient, by a narrow margin, to cause a breach of the requisite code," it said in a written decision.
"The board advised the advertiser (Broadbase Egmont) to take greater care in the future."
Ords are currently promoting Series 4 of this investment in New Zealand. The offer closes on May 12.
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