Consumer's latest investment advice

Consumer magazine has run its rule over the pool of retail unit trust, insurance bond and group investment fund on offer and declared only a few of them "measure up well as retirement savings vehicles."

Thursday, October 14th 1999, 12:00AM

Consumer magazine has run its rule over the pool of retail unit trust, insurance bond and group investment funds on offer and declared only a few of them "measure up well as retirement savings vehicles."

It says only 21 funds out of 269 measured up to its eight selection criteria.

Consumer developed the criteria for screening funds and employed IPAC to run them across its database.

The eight criteria included; access, initial investment, size, up-front fees, on-going fees, track record, performance and continuity of senior investment staff.

Two of these criteria, size and performance, whittled the bulk of the funds out of the survey. Only funds that had either four or five IPAC stars cleared this performance hurdle. This immediately wiped out 65 per cent of the fund universe.

Likewise, funds had to exceed $10 million in size. According to IPAC nearly half of the funds on its database failed on this count.

The third factor that culled a number of funds from the survey was continuity. Consumer says almost half the funds that failed had not retained their key staff for at least two years.

This factor is considered by some to be a bit harsh considering the large volume of merger and acquisition activity going on in the managed fund industry. For instance the National Bank sold its funds management business Southpac to AMP Asset Management less than two years ago and in that process many of the portfolio managers changed. Since the sale the performance of many of the funds has improved significantly and AMPAM won the IPAC Fund Manager of the Year crown this year.

The managers which featured in Consumer's recommended list include; Armstrong Jones (3), BNZ (3), Guardian Trust (1), New Zealand Funds Management (8), Public Trust (2), Royal & SunAlliance (1), Tower (2) and WestpacTrust (1).

This latest Consumer report follows one which drew similar conclusions on super funds.

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