Navigator has placed a number of funds from Perpetual Funds Management (Australia) on hold, indicating that new investments should not be made until a new rating has been applied.
Navigator has placed a number of funds from Perpetual Funds Management (Australia) on hold, indicating that new investments should not be made until a new rating has been applied.
The following information provides a general overview and some background indicators that have led to the new rating. The funds affected by the hold rating include:
- Fidelity Perpetual International Fund; and the following regional equity funds:
- Fidelity Perpetual America Fund
- Fidelity Perpetual Europe Fund
- Fidelity Perpetual Japan Fund
- Fidelity Perpetual South East Asia Fund
- Fidelity Perpetual Split Growth Fund (60% benchmark allocation to international shares)
The hold decision is as a result of the decision to establish a Global Equity Team and to not retain Fidelity Investments after early 2005.
Background on Fidelity Investments
Perpetual appointed the US-based fund manager, Fidelity Investments as its international investment manager in 1993. Since then, Fidelity has been responsible for managing four regional equity funds (North America, Europe, Japan and South East Asia) and the International Fund, which is comprised of regional portfolios.
Fidelity has managed these funds with a "growth at a reasonable price" (GARP) style using bottom up stock selection.
After the International Fund moderately under performed its benchmark in 2001 and 2002 the US portfolio within that fund was transitioned from a "quantitative" approach to a more traditional one where stocks were selected based on bottom up company research. This was also more consistent with management of the other regional portfolios and helped the International fund to out perform its benchmark in 2003.
Perpetual has managed currency exposure for the international fund, with hedging back to Australian dollars at generally low levels.
Global Equity Team recruitment
Perpetual has announced it is establishing a global equities capability and has recruited four global equity specialists from the Bank of Ireland Asset Management. The team appears to be highly regarded in the industry and has a strong track record. Perpetual plans to recruit additional members to the investment team.
From early 2005 the International Fund will be managed by this new team in Dublin. No announcement has been made about the regional equity funds. The recruitment has no immediate effect on the management of Perpetuals International Fund or its regional equity funds
"While Perpetual is expected to manage the transition carefully, the full investment team and its investment process are not yet in place. Additionally, the investment style of the International Fund could change from a GARP to a value style and the regional equity funds may potentially be closed," said Stuart Wilson, Navigators senior research analyst.
"The uncertainty over the investment team, process and style makes it difficult for investors to use the funds when constructing portfolios. Those investors that had specifically sought a GARP style manager such as Fidelity may wish to reassess which international equity managers are used within their portfolios," said Stuart.
Perpetual has advised there are no net unrealised capital gains within the international or regional portfolios and as a result, any redemptions from the funds are not expected to result in the distribution of high levels of realised capital gains to unit holders.
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Stuart Wilson is available for interview.
For further information please contact:
Simon Morgan
Group General Manager Public Affairs
Phone: (03) 9829 8892
Mobile: 0407 966 632
Notes to editors:
- Globally, Aviva Australia is part of Aviva plc, the world's fifth largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78 billion, and more than A$624 billion of assets under management (as at 1 July 2004). The group has more than 56,000 employees and 30 million customers worldwide. Aviva is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$78 billion, and more than A$624 billion of assets under management (as at 1 July 2004). The group has more than 56,000 employees and 30 million customers worldwide.
- The information in this document reflects Norwich Union Life Australia Limited's (NULAL) and NULIS Nominees (Australia) Limited's ('NULIS') understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person and it is not a substitute for professional advice. Applications to invest in a financial product issued by Aviva, or any of its related entities, must be made by completing the application form attached to the applicable Product Disclosure Statement ("PDS"). A PDS is available from Aviva or your financial adviser. Before making an investment decision on the basis of the information above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the information is appropriate in the light of their particular investment needs, objectives and financial circumstances.