News Round Up
Commission on the case of adviser disclosure; Strong demand for TeleBonds; S&P award two five-star ratings in peer review; Options Portfolio celebrates four years of over-achievement; CBA withdraws from ABN Amro
Monday, August 18th 2008, 5:39AM
by Maddy Milicich
Commission on the case of adviser disclosureThe Commerce Commission has been carefully monitoring investment advisers and brokers are providing up-front disclosure, after the new law that came into force on 29 February this year.
As part of its monitoring process, the commission wrote to 1,451 individuals and businesses on 3 March 2008 requesting copies of their disclosure statements.
So far the general level of disclosures submitted is good, however in some aspects there seems to be confusion over what is required.
One such aspect is the requirement to disclose the nature and scope of the adviser's professional indemnity insurance. The commission is currently considering the matters that should be included and is planning to provide guidance on it.
Another aspect widely misunderstood is the application of the new investment adviser and broker disclosure laws to certain activities.
The commission will take enforcement action where necessary and will continue to monitor disclosure documents.
Failure to comply with disclosure obligations can result in fines up to $300,000.
Strong demand for TeleBonds
TCNZ Finance has announced it has closed the retail TeleBond offerings, which were offered in three, five and seven year maturities.
Most investor interest was shown in the five and seven year tenors.
"It is encouraging the New Zealand debt market can still offer significant financing for well-rated corporates despite these uncertain times on global capital markets," Telecom CEO Russ Houlden said.
S&P award two five-star ratings in peer review
Australia's BT and Perpetual have been awarded a five-star rating by Standard & Poor's, following the completion of its peer review.
The two managers focus on selecting high-quality companies that are leaders in their respected industries and which have the ability to produce stable cash flows over the longer term.
The peer review included 12 investment strategies, offered by 11 managers. Of those that were rated, six product ratings remained unchanged, one was downgraded, one was upgraded and four were rated for the first time.
Options Portfolio celebrates four years of over-achievement
Fidelity Life's Options Portfolio has celebrated its fourth birthday in style. A return of 2.81% (after fees and tax) for July took the return for the fourth year to 16.37%.
Since its initiation, the portfolio has returned 11.22% annually.
The Options Portfolio uses short-term NZ cash and fixed interest investments as security for options contracts written on the movement in 10-year government bond rates over a 30-day period.
When launched, Fidelity expected returns of around 10% per year after tax, but it has done much better than that, due in part to manager Tyndall's conservative approach.
CBA withdraws from ABN Amro
Commonwealth Bank of Australia ended talks to acquire ABN Amro's investment banking and corporate finance units in Australia and New Zealand.
The bank said risks in integrating the businesses were too high given the current economic climate and uncertainty in world financial markets.
The owner of the businesses, Royal Bank of Scotland, will retain them after failing to find a buyer.
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