News Round Up

BT gets qualified tick, NZIT manager merges, Perpetual adds new asset class, Auckland house price update.

Monday, August 16th 2004, 3:32AM

Standard & Poor’s has given BT Funds Management in Australia a qualified thumbs up and has assigned its ratings to a number of Australian equity funds.

“Following the merger of the Westpac, Rothschild, and BT wealth management businesses in November 2002, significant changes have been made to the Australian equities team structure and investment process. Investment decisions are now more transparent and risk aware, with performance of portfolio managers and analysts being closely tracked and individuals are held more accountable for the impact on returns,” S&P says.

“While still in the early days, BT's renewed focus, investment discipline and the settling of the investment team have contributed to a material improvement in performance and allow the fund to be rated 'A New',” fund analyst Ramon Eyck says.

"A New" ratings have been given to five funds including BT Australian Shares and BT Imputation Fund. (New–Ratings are designated as ‘New’ where the investment process, fund manager or analytical team has changed significantly, but where a relevant and demonstrable track record can be shown on similar funds).

NZ Investment Trust’s manager mergers

Exeter Investment Group, the manager of the New Zealand Investment Trust, has announced that it is to merge its business with iimia Investment Group Plc. The new enlarged group will seek to continue to develop its investment and administration services and to increase the level of funds under management.

iimia is a relatively new, rapidly growing, private client investment management and fund management group with approximately £288 million funds under management and advice and principally combines three operating divisions: financial planning, private client investment management and fund management. Exeter currently has around £180 million funds under management and principally comprises two operating divisions: investment management team and third party administration.

Richard Scott of Exeter will remain with the new enlarged group and retain ongoing management responsibilities for the New Zealand Investment Trust, First New Zealand Capital investment trust expert Peter Irwin says.

Pertpetual adds new asset class
Australian-based manager Perpetual Investments is adding a new asset class, "mezzanine mortgages", to three of its diversified funds.

Perpetual says a mezzanine mortgage (2nd mortgage) is a form of project financing which is subordinate to a traditional mortgage (1st mortgage) and senior to the project owner's equity.

Generally, mezzanine mortgage investments have a higher loan to value ratio (LVR) than 1st mortgages. In the case of Perpetual's Mezzanine Mortgage Pool Fund the LVR will be greater than 66.67% to a maximum of 95% (i.e. 2nd mortgage loans).

Mezzanine mortgages offer investors a higher yield (with a commensurate increase in risk) than traditional mortgages.

By including exposure to a diversified pool of mezzanine mortgages, Perpetual is aiming to improve the returns of its diversified funds overall.

Exposure to mezzanine mortgages will be gained by investment in to Perpetual's Mezzanine Mortgage Pool Fund.

Auckland property slowing
The latest sales figures from Auckland real estate firm Barfoot & Thompson indicate that while the Auckland property market is slowing, prices are holding steady.

“The average sale price pulled back slightly during July to $425,850 from $429,739 in June. However, when you take an average of the past three months, prices were 18% ahead of a year ago and almost 9% ahead of the three months to April,” director Peter Thompson says.

“While prices held, the total number of sales dropped off during the month.” Barfoot & Thompson sold 887 properties during July, the lowest July result since 2001 and a third fewer than the same month last year.

“This clearly indicates an easing in the Auckland residential market, but it’s very interesting to see that average price data is still relatively firm.”

The rental market was firm during July with the average weekly rental lifting for the third month in a row to reach $330 per week.

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