End of an era
The former Renouf New Zealand equity fund, now owned by Direct, is no longer.
Tuesday, September 21st 1999, 12:00AM
Direct Broking bought this fund and others run by Renouf Asset Management late last year soon after Sir Francis Renouf -the man who introduced managed funds to New Zealanders in 1960 - died.
Following the purchase it dumped Ross Asset Management as the manager and has had to write down the unit price by 23 per cent because of tax problems.
Because of the trust's poor performance it had built up significant tax credits which were included into the unit price. Direct hoped to be able to use these tax credits once the fund's performance recovered.
However, it has suffered major unit redemptions and consequently has lost those credits.
"The availability of these benefits was dependent upon 49 per cent unitholder continuity from April 1," director Stephen Underwood says in a letter to unitholders.
He says because of the redemptions the fund has become so small it is no longer viable.
The other problem Direct had was finding a new manager for the trust. Following the dumping of Ross Asset Management, Direct managed the fund itself. It approached Colonial First State to manage the fund, however this arrangement never came to fruition.
"Unfortunately the discussions with Colonial First State were terminated by them and the proposed appointment did not proceed," Underwood says.
He says Direct discussed the situation with the majority (56 per cent) of unitholders, however this "advisory group" told them they "would not support the appointment of another investment manager and confirmed that their clients would redeem their investments."
Direct has written to the trustee and asked for the fund to be terminated. It hopes that the wind-up and distribution process will be completed by the end of September. The final unit price will be determined after wind-up costs are known.
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