MEDIA RELEASE
21 May 2004
INDUSTRY COMMENT ON CONSUMER ARTICLE –
BALANCED MANAGED FUNDS REMAIN A SOUND INVESTMENT
"The review of a selection of balanced funds released by
Consumer today takes a very narrow focus and does a disservice to savers seeking useful
financial analysis. Consumer has reviewed approximately 5% of a $44 billion
industry", said Vance Arkinstall, CEO, Investment Savings and Insurance Association.
"The item compares returns achieved over the past 10 years
including the negative returns over the past three years which are widely acknowledged as
the worst equity downturn since the 1930s", said Mr Arkinstall.
Many investors have during this period diversified into specific
sector investment funds such as mortgage, cash management and fixed interest unit trusts,
which have provided good protection for investors from the difficult trading conditions
over this period. However, the fact remains that balanced investment funds represent the
most suitable investment vehicle for many people. We hope that the Consumer article does
not encourage investors to abandon their balanced fund products. These are excellent long
term investments. Now would be totally the wrong time to consider change", said Mr
Arkinstall.
"The Consumer article draws attention to the importance of
fees but fails to analyse the changes in fee structure and the increased transparency
within the industry over the past 10 years", said Vance Arkinstall.
"Greater flexibility, reductions in fees, discounting of
fees and a move by advisers to charging for service have become features of industry
development", said Mr Arkinstall.
"It is particularly disappointing that Consumer did not
comment on the impact that ‘timing’ has on this review. For example, had
Consumer measured performance over the period 1993 to 2000, the return for all balanced
funds would have been 5.40%. 70% higher than the average return Consumer quote", said
Mr Arkinstall.
"The industry encourages financial analysis of its products
and performance but the narrow focus in this case provides limited value to investors. We
are however, encouraged by Consumer’s final comment "Whatever you do,
don’t give up saving and investing" – we think Consumer got it right on
this point", said Vance Arkinstall.
For further information contact:
Vance Arkinstall, Chief Executive
Investment Savings and Insurance Association
