Adolf has drawn my attention to the Huljich fund. As of this morning I had never heard of it but he maintains they have done markedly better than their opposition in offering Kiwisaver returns. That would appear to be on the basis of misrepresentation. When they started their funds they pumped the returns so that their investment statements would be able to show an excellent return in comparison to other funds. Evidence this extract from the Huljich investment statement dated 9 September 2009. If you cant see the small print Huljich have super high returns whilst their competitors are in the red. If you believe that is real I have a bridge to sell you.
As an aside I am gobsmacked by the paucity of information allowed in the investment statements and annual report. Not even a set of financial statements in the investment statement(only annual report) or a disclosure of current holdings in either. Given the political importance of ensuring that Kiwisaver investors are not subject to breach of trust I would have thought they would be obliged to disclose their actual holdings in the same way as the Cullen Fund. That would ensure that competitors and the public are able to validate their returns against independent data rather than simply being forced to rely on pretty graphs on a website.
The conservative fund touts a return to Sep 2009 from inception of over 20% per the graph above. 16% for the comment extracted from page 6 their 16 page annual report to March 2009 below. 16 pages of which 4 contain any valuable information rather than just the type of fluff below
“Huljich has been a standout performer showing positive returns over the last year in all funds – conservative, balanced and growth – in a time when most of the market has been going backwards.” “The secret to his success – including a 16.07 per cent return for the company’s conservative fund – was an early move, ‘a no-brainer’, to cash and fixed interest as opposed to shares. As an active fund manager, Huljich says the company has more discretion than many about how it handles its funds’ asset allocations.”.
How many of you could earn 16% in cash and fixed interest. Either they speculated on under priced bonds for a conservative fund or there is something dodgy about the declared return. It seems reasonably clear to me they pumped their returns shortly after 31 March 2008 when they had total members accounts of only $107,066 per page 10 of the Annual Report . This upped their unit price on a small value as the SST indicated.
Then for the investors after March 2008 they do not calculate the growth from inception but instead take advantage of that nice fake buffer by calculating the unit price from the ramp rather than as a weighted average of returns from inception. The unit price is nominal and subsequent investors would not be prejudiced by the ramping but would simply have been mislead into investing in a fund that actually made a loss in its first 6 months. It would be fascinating to see their weighted monthly portfolio returns against the value of the portfolio at that time along with a link to their portfolio structure at each point. The definition of "Investment Returns" is interesting. I cannot see whether it is mark to market or actual cash. Will check later.
I am also incredibly surprised that Don Brash is anywhere near it. I have huge respect for his integrity even if I do disagree with some of his actions as Reserve bank governor.
UPDATE: I have investigated further. The dates don't stack on March 2008 for the growth fund although they could fit on the conservative. I withdraw the wilder statements above and have adjusted the post accordingly. I stand by the curiosity about how their portfolio has performed month by month.
You can get at their full detailed accounts at the Companies Office which have got a split between the funds showing they lost money till March 2009. The unit price was slightly negative at March 2009. - 0.9743 at which time they had $11.6m in their fund so Adolf is right the impact would be negligible. By Sep 9 that had risen to 1.0853 which I can easily believe given the lift in global stock markets during that time.