Awards add twinkle to a year many would rather forget

By MARK FRYER

Last year will not go down as one of the great ones for most fund managers, or for their customers.

Over the year the amount controlled by local managers shrank by between $1.1 billion and just under $2 billion, depending on how you define the industry and whose research you follow.

That fall came partly from clients pulling their money out and partly from markets eroding the value of investments.

But the coming week will bring a little good news for at least some managers, with the announcement of the winners of the annual Morningstar/Business Herald Fund Manager of the Year awards.

There are eight awards in all - seven for the best managers in specific sectors, plus the overall Manager of the Year title, last year won jointly by BT Funds Management and ING New Zealand.

Winners will be announced in the Business Herald next weekend.

The 10 finalists for the awards are:

* ANZ Funds Management.

* AXA NZ.

* BNZ Investment Management.

* BT Funds Management.

* ING NZ.

* National Bank of New Zealand.

* NZ Guardian Trust.

* Sovereign Services.

* Tower Managed Funds.

* WestpacTrust Investment Management.

The nominees, and winners, are chosen by managed funds research company Morningstar. The awards are open to New Zealand-based managers of "retail" superannuation funds and unit trusts - those open to the public - as long as they have been rated by Morningstar for at least 10 months of the year. Passive or index funds are not eligible.

Inevitably, given the way the year went, the winners will include some managers who turned in negative results.

Most of the damage was done by overseas shares. According to Aon Consulting, the average manager's overseas share investments fell by 31.2 per cent last year.

Aon says that the returns on "discretionary" investments - where the manager gets to choose the mix of investments - were the worst it has recorded, even worse than than in 1987.

In that climate the winners in the funds business have tended to be "defensive" investments, such as mortgage trusts, which in good times can't match the returns of sharemarket funds