Inside Money: ASB shuts funds and mouth

ASB's decision to close a number of its retail funds caused a bit of a kerfuffle recently but it shouldn't have been a surprise.

The bank flagged its intentions this April in an updated prospectus, that no-one but me, it appears, read.

Other than meet its statutory duties to publish the prospectus, however, I doubt if ASB went out of its way to alert investors of its intentions which it stated in the April 1 document: "It is anticipated that, within nine months of the date of the Memorandum of Amendments to this Prospectus, the Trusts may be wound up and investors offered an alternative investment solution," the prospectus says.

"No formal decision has yet been made, but investors will be given three months notice prior to any wind up in accordance with the Trust Deed."

I got into a bit of trouble with ASB on account of a story I co-authored with a colleague in May on Australian publication I&T News that speculated on a few other changes in its investment division.

It's still not clear exactly what is happening inside ASB's investment business but it is true that the fund closures were part of a broader shake-up in that department. For example, the bank is close to selling its Aegis investment platform, which administers and reports on close to $6 billion of money invested by many thousands of New Zealanders.

According to a source of mine who attended the recent Aegis conference, Laurie Mellsop, ASB general manager investment, told the crowd several parties have expressed interest in buying the platform.

"These parties had done due diligence and they were now entering negotiations. [Mellsop] said they would have a clear outcome in 4-6 weeks," my source tells me.

Macquarie, Westpac and the NZX were all rumoured buyers. I'm betting on Westpac.

ASB is naturally cagey about how it communicates this stuff - 'commercially sensitive' etc. And as Mary Holm explained in her recent column ASB's decision to close its range 'non contemporary' funds makes sense.

But I still think the bank could've done a better job of explaining the changes to investors - it might've prevented all those outraged letters to Mary.

Even now there is no mention on its website that these funds are about to close (September 30) and what the options may be for investors in those products.

David Chaplin