News Round Up

ANZ and ING in trouble over funds; Milford market outlook; Looking for honey in a bear market

Monday, January 26th 2009, 5:00AM

ANZ and ING in trouble over funds
The ANZ Bank and fund manager ING are being investigated by the Commerce Commission over potential breaches of the Fair Trading Act in their marketing of troubled investment funds.

In March the Diversified Yield and Regular Income Funds, both of which invested in collateralised debt obligations (CDOs) and collateralised loan obligations (CLOs) were frozen, leaving 8,000 investors unable to access total investments worth $521 million.

The freezing of the funds ignited a string of complaints to the Banking Ombudsman.

ANZ owns 49% of ING and actively promoted the funds to customers.

Milford market outlook
Milford Asset Management continues to have a very cautions outlook for the global financial market in 2009, saying the outlook for New Zealand and Australia also remains poor.

The company has reported valuations of equities have fallen sharply and reflect a very poor outlook for future earnings. Fixed income rates have also dropped sharply following falls in official interest rates.

Despite the yield falls, Milford believes that bonds remain an attractive option, given the prospect for a prolonged period of low rates.

Looking for honey in a bear market
Traditionally risky investment classes are regaining some attraction for New Zealand investment managers, according to Russell Investments’ latest survey.

The survey found managers are looking to international equities for opportunities, and have become bearish about cash, along with New Zealand equities

“While 22% of the managers felt the NZ equity market is significantly undervalued, 33% undervalued and 44% as fairly valued, they still have a degree of uncertainty about NZ equity returns,” Russell’s senior manager of investment consulting Alister Van der Maas says.

“They consider prices may be negatively impacted over the short term by downward revisions of earning expectations and declines in global and NZ growth rates.”

Asked how the local economy will fare, 78% of managers thought the impact would be substantial.

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