About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   depositrates.co.nz  |   landlords.co.nz
Last Article Uploaded: Thursday, September 21st, 6:53PM
Check out GoodReturns TV now! Dismiss
rss
Latest Headlines

It's not ethical for managers to keep getting fees on frozen funds

Is it ethical for fund managers to continue to get management fees on funds that have been frozen?

Sunday, September 11th 2011, 5:14PM 1 Comment

by Goldie

Fund managers should not get paid management fees – or at best should have them severely discounted - for the period the funds are frozen. It is immoral that trapped investors are forced to contribute to the profit of their tormentor, against their will and with no option to get out and prevented from making new investments of their choice. Further, a fee cut would serve as a disincentive for fund managers to get in that position or to keep funds closed. Currently it is quite attractive (especially in a bear market) to close funds indefinitely. This forces investors to withdraw from other liquid investments or when rebalancing, funds have to come from elsewhere. It also retains a handsome profit for incompetence. Maybe a receiver should be appointed to determine if the manager continues? It seems incredible that investors are still trapped after three years in mortgage funds, infrastructure funds and other hedge funds etc, and with no say whatsoever and paying full fees for non-performing investments. Regulators could include in the new legislation that fund managers who fail to provide the liquidity promised should forgo profits. In many cases, when funds are frozen management fees are fixed at the old high levels. That’s not right. Of course the corollary would be that advisers should not assess fees on frozen funds – and certainly not at moratoria value, not that many of those are left. Moratoriums didn’t work did they? The poor suckers who invested then voted for the perpetrators to stay in the existence to manage something they couldn’t manage in the first place - another bite at the cherry.

« Where are the regulators when you need them?Where oh where are the KiwiSaver accounts? »

Special Offers

Comments from our readers

On 11 September 2011 at 10:48 pm Forthright said:
To be fair there are a number of managers of suspended funds who are not charging full fees and are in fact charging nil or substantially reduced management fees. To be fair, managers need to at least cover the costs incurred in the winding up process. Also in a number of cases, managers put the matter of winding up the funds, to a vote by investors. Most sensible investors rejected the sell now at severely depressed market prices, and voted to wait for better prices and conditions to maximise the value of their investments. Therefore you can’t call these investors trapped or imply this process is flawed in some way or another.

It is also worth reminding those who didn’t know, that some managers have paid out investors who had funds invested in illiquid funds.

I recently received a communication from OnePath that they are going to pay out investors in one of their suspended funds. So I say, good on OnePath.

I expect the author is right and in some cases managers are taking full fees on non-performing investments and I also suspect some advisers are taking full fees/commissions on the same non-performing investments.
Commenting is closed

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
  • Sovereign sold
    “@Mr Slater I don't think so. An Aussie story I saw said the price was 16.9 times 2017-18 pro forma earnings. That story...”
    4 hours ago by Murray Weatherston
  • Sovereign sold
    “It looks like AIA may have now joined the Big End Of Town. Hopefully that isn't a negative thing and they continue to act...”
    4 hours ago by Comprehensive Planner
  • Sovereign sold
    “Large financial institutions are divesting themselves of wealth management capabilities presenting threats and opportunities...”
    4 hours ago by Pragmatic
  • Sovereign sold
    “Murray I hope it wasn't a case of 'buy one get one free'?...”
    5 hours ago by Mr Slater
  • Sovereign sold
    “While we should probably never give the bi little Scotsman a chance to gloat, David what exactly was your recommendation? Second...”
    7 hours ago by Murray Weatherston
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News

MORE NEWS»

Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

Lender Flt 1yr 2yr 3yr
ANZ 5.79 5.05 ▼5.19 ▼5.49
ANZ Special - 4.55 ▼4.69 4.99
ASB Bank 5.80 4.75 4.99 5.29
ASB Bank Special - 4.45 4.69 4.99
BNZ - Mortgage One 6.50 - - -
BNZ - Rapid Repay 5.95 - - -
BNZ - Special - 4.59 ▲4.75 5.09
BNZ - Std, FlyBuys 5.90 4.99 5.29 5.59
BNZ - TotalMoney 5.90 - - -
Credit Union Auckland 6.70 - - -
Credit Union Baywide 6.15 5.45 5.50 -
Lender Flt 1yr 2yr 3yr
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 5.00 5.20 -
Housing NZ Corp 5.79 ▼4.75 ▼4.99 ▼5.29
HSBC Premier 5.79 4.09 4.29 4.89
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
Lender Flt 1yr 2yr 3yr
ICBC 5.80 4.59 4.69 5.09
Kiwibank 5.80 4.95 5.15 5.59
Kiwibank - Capped - - - -
Kiwibank - Offset 5.80 - - -
Kiwibank Special - 4.55 4.65 5.09
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 6.10 5.10 5.45 -
Resimac 5.30 4.86 4.94 5.30
RESIMAC Special 5.00 - 4.75 -
SBS Bank 5.89 4.99 ▼5.19 5.59
Lender Flt 1yr 2yr 3yr
SBS Bank Special - 4.59 ▼4.69 5.25
Sovereign 5.90 4.75 4.99 5.29
Sovereign Special - 4.45 4.69 4.99
The Co-operative Bank - Owner Occ 5.75 4.55 ▼4.69 ▼4.99
The Co-operative Bank - Standard 5.75 5.05 ▼5.19 ▼5.49
TSB Bank 5.80 4.80 5.15 5.45
TSB Special - 4.55 4.69 4.99
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.95 4.99 5.19 5.59
Westpac - Capped rates - 5.26 5.36 -
Westpac - Offset 5.95 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 4.59 4.74 5.09
Median 5.82 4.78 4.99 5.29

Last updated: 20 September 2017 10:08am

News Quiz

The maximum remuneration model for Australian life insurance advisers is to be set at what?

Upfront 40% + trail 20%

Upfront 50% + trail 10%

Upfront 50% + trail 20%

Upfront 60% + trail 10%

Upfront 60% + trail 20%

MORE QUIZZES »

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
 
Site by Web Developer and eyelovedesign.com