KPMG queries some fixed interest investments
Investments in term deposits have held up despite the return to form by sharemarkets over the past year.
Wednesday, May 5th 2004, 6:42AM
by Rob Hosking
The continued growth shows that significant number of investors are still attracted by the safe nature of those investments, despite the comparatively low interest rates, the KPMG report says.
KPMG chairman Andrew Dinsdale queries some of the products currently on being sold to investors.
“The interest rates being offered by some finance companies, when you look at the Wednesday and Saturday newspapers, make you wonder a bit,” he says.
“One of the factors in the growth of the property market has been the growth in retail debenture market and they are offering nine, 10, 12% rates in some cases.
“I worry that some of the people investing in those products are not able to afford that sort of risk.”
Dinsdale is quick to add that he is not suggesting a failure of any of those firms is likely, but is just stressing that products offering that sort of return carry bigger risks than perhaps investors realise.
The KPMG report also shows that banks continued to grow their funds under management over the year - growing by $2.2 billion, or 12.9%.
ING (which manages ANZ’s money) is still ranked top, with $2.9 billion and New Zealand Funds Management is second with $1.7 billion.
The KPMG keeps ASB and Sovereign separate – but if put together it would be number two with $2.8 billion funds under management.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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