Managed funds go into limbo

By PHILIP MacALISTER

New Zealand fund managers closed their international managed funds yesterday and it is not known when they will start letting people redeem their investments.

Managers said it was impossible to price their investments with the American markets closed.

Investment Savings and Insurance Association chief executive Vance Arkinstall said investors should not be concerned, as managers would monitor progress.

But managers have warned that if there were signs of panic from investors they could, depending on their trust deeds, continue to suspend redemptions indefinitely.

The Guardian Trust Funds Management managing director, Anthony Quirk, said managers were assessing the situation, and it was not known when the US markets would reopen. "Unless you think this is the end of the world then you're better to hold."

The closest parallel was the Kuwait invasion 10 years ago, when investors oversold, said Mr Quirk.

Alliance Capital general manager James Thyne said the attack could be a catalyst for a more concerted effort to improve economic growth. "It could be said that the markets have reacted rationally so far - but it could also be said that they have overreacted in more general terms.

"It is this overreaction that some investment managers may perceive as an opportunity," Mr Thyne said.

Mr Quirk said much of the bad news had been priced into the market.

European markets took a hit overnight. Germany's DAX index closed down 8.7 per cent, France's CAC was 7 per cent down and the FTSE 5.7 per cent down.

In a perhaps perverse twist, the catastrophe has provided buying opportunities.

Mr Quirk said that although volumes were light on the NZ market, some stocks were trading at "pretty cheap prices".

"It's not Armageddon from an economic point of view," he said. " It's very unusual circumstances."

Although international funds were closed, cash, mortgage, NZ fixed interest and some NZ equity funds were open.