Bigger, brighter and better
Aligning, integrating and consolidating the investment products of three companies is the objective of changes to BT Funds Management’s Australian based funds.
Friday, October 10th 2003, 7:48AM
Last year Westpac bought Rothschild Australia (and renamed it Sagitta) then it acquired BT Funds Management. Investors in many of these funds have been sent letters outlining changes made.
“Bringing together the BT, Sagitta and Westpac wealth management businesses in Australia has created an extremely large investment range, which includes a number of funds with similar investment managers and objectives.
Rather than continuing to offer three separate brands and product ranges, it was determined we should consolidate and refine our product range,” BT says.
BT Funds head of marketing Gordon Noble-Campbell says the changes bring the various characteristics from the different managers into line.
“It’s been a very positive step,” he says.
The changes are being made only to the Australian-domiciled funds, not to BT’s New Zealand range.
Noble-Campbell says the Australian funds, which were the original products used in this country when it set up here, are still “widely used” by New Zealand advisers and investors.
“They are an integral part of our total offering.”
As reported earlier on Good Returns BT has increased its entry fees on a number of funds from 3% to 4%. Noble-Campbell says although the maximum entry fees have gone up they are fully rebatable.
“It’s not a blanket increase.”
He says it’s up to the adviser to decide how much their clients pay to get into an investment.
The changes provide an opportunity for advisers to “look at their own remuneration structures.”
Another of the changes is that the Top Up Plan option for existing investors is no longer available.
On the investment side various changes have also been made to the asset allocations of four funds; Future Goals, Balanced Returns, Income Plus and Split Income.
Noble-Campbell says the funds are managed in Australia to Australian conditions.
Changes have also been made to some of the benchmark indices and to the currency management for international shares.
“The currency management policy of BT and Sagitta will be brought into alignment. BT in Australia will be adopting an active currency approach seeking to protect and/or enhance the Australian dollar value of the international share component of a fund through managing exposure to currency fluctuations by hedging up to 20% of the relevant fund's international shares exposure.”
Another significant change is the introduction of alternative assets into balanced funds as they tend to have low correlation with returns from more traditional asset classes.
“The addition of alternative investments in a portfolio has in the past had a positive impact on returns, whilst reducing the overall risk of the portfolio,” BT says.
It quotes Australian research house Van Eyk in support of the move: “The majority of managers invest only in traditional asset classes. However, a few of them have included "alternative asset classes" in the balanced products such as venture capital, emerging markets, indexed bonds etc. We view this as positive and expect to see a further diversification with a wider inclusion of these and some new asset classes (corporate debt, emerging market debt, hedge funds etc) in balanced portfolios.”
BT has also made changes to the unit pricing methodology used in its funds, except the cash management fund.
It is introducing spreads between entry and exit prices to reflect the costs associated with buying or selling assets on behalf of existing investors than the existing rounding of the unit price (which the unit price spread will replace).
These spreads will range from 0.02% to 0.08%.
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