[Weekly Wrap] Reinventing the wheel

This week we saw mortgage funds back in the spotlight with AXA confirming it was winding up two of its mortgage funds.

Friday, April 3rd 2009, 4:45PM

Also there is a story in the Mortgage Centre about Bluestone, which was formerly a specialist lender, reinventing itself and managing loan books for other companies. It bought part of the Provincial Finance book late last year and is keen to acquire more books. (No doubt there are plenty to choose from).

The other mortgage fund story involves ING and Australian-based LM Investments. This is a fascinating story as it goes to the heart of the issue with many of these funds. ING's PPS Mortgage Fund has 12% of its assets with LM, and requested a full redemption last year. LM acknowledged that but said because of the state of the markets, redemptions were suspended. Now PPS is quarantining that part of the fund.

I assume LM is quite within its rights to do what it did, and it seems the PPS move is sensible too. But the whole issue goes to the heart of these sorts of funds. The assets aren't necessarily highly liquid and investors can't always expect to get their money back immediately.

We have seen this many times before, one of the most memorable periods was in the early 1990s when unlisted Australian property trusts ran into this liquidity problem. Co-incidentally one of the big players there was ING's predecessor, Armstrong Jones.

It was pleasing to see that this week the G4 group of advisory associations got together for the first time this year and are now the G5 with the NZ Mortgage Brokers Association joining up. No doubt their meeting was less confrontational than the G20 in London.

This week's Insurance News has an update on the proposed changes to the tax of life insurance products, Fidelity Life has appointed a name, well-known in insurance circles, to its board and we also have some updates on changes to some of the advisory groups in the market.

AXA says its new joint venture advisory group, AdviceFirst will deliver a business model "often talked about but seldom achieved", according to AXA New Zealand CEO, Ralph Stewart.

Also this week is a Practice management article: Leading your team to the top. Working alone is not the best approach to business. No one person can keep up with the regulatory demands, specialisation and paperwork faced by today's advisers.

The other People news this week is that Marac has a new CEO, and Tower's KiwiSaver man Robert Gatward has changed camps.

Have a great weekend.
Philip