Hanover investors to be offered money back

Fledgling Hanover Funds Management is to offer investors in its first product their money back, after the Securities Commission objected to the way potential returns were presented in advertising.

The company's Hanover's Global Growth Fund, launched last month, offers investors a potential 50 per cent return on their investment after five years. But the commission has prohibited some advertisements for the fund that may mislead investors into thinking they would receive 10 per cent per annum.

"Even if they receive the 50 per cent return at the end of five years, this equates to less than a 10 per cent annualised return on the investment," said commission chairwoman Jane Diplock.

She said Hanover had co-operated with the commission and agreed to write to investors to ensure they correctly understood the product and to offer them their money back.

Hanover Group chief executive Andrew Schmidt said the fund had yet to be allocated to investors and therefore no money had actually changed hands.

He said the product was a form of "equity linked note". Investors would be "in the money" if the basket of indexes rose by 10 per cent or more over the five-year period. If not, investors would still be repaid their initial principle.