Upstart fund undervalued

The New Zealand Stock Exchange has been unable to sell the TeNZ index fund.

Thursday, July 8th 1999, 12:00AM

TeNZ maybe the oldest index fund in New Zealand, however it is unwanted by any of its younger siblings.
The fund, which tracks the NZSE10, was the upstart of New Zealand's managed fund world when it was launched by the New Zealand Stock Exchange in May 1996. Back then everyone wanted a piece of the action. Now though the exchange has been unable to find anyone to pay an acceptable price for the business.
The exchange announced in April it was putting the management contract for its older and more mature $195 million TeNZ passive fund on the market.

It decided to try and sell the contract as it wasn't considered a core business of the exchange, rather it wanted to concentrate its resources on its business base.
NZ Stock Exchange managing director Bill Foster said at the time that although the fund has been highly successful in introducing investors to the concept of index funds and lower management fees, the exchange was not in the position to further develop it.
He said a professional fund manager would be better able to market the fund.
However, it failed to consummate a sale after putting the contract out to tender.
Foster says all the expected parties bid for TeNZ, however no one offered an acceptable price.
"We haven't had any offers to indicate people value it more highly than we do," he says.
Foster says he is disappointed that others didn't value the business as highly as the exchange does.
In the meantime the exchange will "hang onto" the business and keep managing it.
The TeNZ fund is managed by exchange subsidiary NZSE Index Management Ltd. The exchange's annual report shows that the company's revenue fell from $769,242 to $665,569 in the year to June 30. Management fees fell 31 per cent to $113,817 in the 12 month period.

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