An argument over the level of fees charged within the Calan Healthcare Properties Trust has broken out between the company and a former employee.
Chris Donahoe has emailed hundreds of financial planners expressing his concerns over the direction of the trust which is now listed on the New Zealand Stock Exchange.
Donahoe says that he was "the architect of the original investment strategy for the Calan Healthcare Properties Trust".
The trust, he says was established to buy properties in New Zealand which were in the health sector, and to generate a good level of income for unitholders.
"This was the basis upon which capital was raised to build a portfolio of New Zealand based, diversified, income generating health and medical related properties."
However, he says the company has now been active in Australia (a mandate to operate across the Tasman was granted by unitholders several years ago), and it is heavily involved in property development.
He says these changes have increased the risk profile of the fund. Also the direction of the trust has generated high levels of fees, above the standard management fees, which have impacted on the trust's performance.
The company says it has clearly stated its direction in communications to unitholders.
It says that its preference is to acquire existing facilities, but at times it has to build new facilities, particularly in the growing surgical and medical market.
Donahoe has told advisers that the New Zealand unit trust structure lacks a number of controls for unit holders.
"Closed ended funds in particular are vulnerable. I believe the Unit Trust Act of 1960 needs to be amended to ensure management transparency and accountability and to make it easier for unit holders to exert control over the entity; with the minimum requirement being that of a limited liability company.
"I also believe some of the features of the Managed Investments Act in Australia should be incorporated into New Zealand securities Laws. Particularly those dealing with the charging of management fees and the discloser (sic) of the management expense ratio."
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