Actively seeking a manager

The former Renouf Asset Management International and New Zealand share funds are anything but actively managed.

Thursday, July 1st 1999, 12:00AM

US FED RISES RATES 0.25%

The United States Federal Reserve has raised interest rates by 25 basis points.

The news was well received by the US sharemarket, with the Dow Jones rallying up to 200 points after the announcement. It ended the day 155.45 higher at 10,970.80.

Federal Reserve chairman Alan Greenspan indicated that this was a one-off tightening, rather than the first of a series of rate increases. He also indicated that the Fed had moved from a tightening bias back to one of neutrality.

The 30 year bond rallied strongly also and is back under 6 per cent.

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The former Renouf Asset Management International and New Zealand share funds are anything but actively managed after a proposal to appoint Colonial First State Investments manager fell over.
The new owner of the Renouf funds, Direct Funds Management, wrote to unitholders last month (see earlier story) telling them it was recommending Colonial First State Investments be appointed manager of the actively managed New Zealand and International share funds.
It was proposed that both funds be liquidated and the proceeds reinvested in portfolios which mirror Colonial's Global Share Trust and its Tasman Shares Trust.
Included in the letter was a CFSI flyer telling unitholders all about that company's style and investment philosophy.
However, Colonial First State chief executive Bruce Abraham was unaware the letter had been sent out.
He says CFSI had looked at the funds but decided not to takeover their management.
Likewise Direct earlier had discussions with Dresdner RCM Global Investors to take over management of the international fund, however chose not to proceed down that route.
Currently the International fund is being liquidated and redemptions are frozen. The redemption freeze has been lifted on the New Zealand fund and it is being actively managed by Direct managing director Nigel Wynn. The fund did - 2.1 per cent in the June quarter against -1.8 per cent net for the index.
The International and New Zealand funds have had their unit prices written down by 41 per cent and 23 per cent respectively primarily due to tax losses.

While CFSI turned down the opportunity to add the Direct money to its funds under management, it is actively wooing unitholders in the former Prudential unit trusts to stay with Colonial by offering trips to Fiji as incentives.
Colonial bought Prudential last year and is currently in the process of closing all the Pru funds and some Colonial ones.
Unitholders have been given the option of cashing up their investments or reinvesting them into new funds.
To date CFSI has secured about $16 million of the $100 million of funds under management put at risk in this process. Abraham says investors have six weeks left to make up their minds about what to do with their money. So far only 20 per cent of unitholders have made a decision.
All about the rationalisation